Thematic Investing: Question & Answer
Read Time 7 MIN
- What is thematic investing?
- Why should advisors and investors consider thematic investing?
- What is VanEck’s approach to thematic investing?
- What are some misconceptions about thematic investing?
- What are some of the significant thematic trends?
- How can investors use ETFs to get access to market themes?
- How can investors learn more about thematic investing?
What is thematic investing?
Thematic investing is an investment strategy that focuses on specific themes or trends in the market rather than traditional asset classes or sectors. It involves selecting investments in companies or assets expected to benefit from a particular theme or trend. These themes can be broad, such as clean energy or technology innovation, or more specific, like e-commerce or cybersecurity. Thematic investing allows investors to align their portfolios with their beliefs, values, or expectations about the future, and it can provide diversification and potential growth opportunities. Thematic investing has become very popular in recent years, with the potential for themes to provide outperformance to the broad market.
Why should advisors and investors consider thematic investing?
Investors may consider thematic investing for several reasons.
- Diversification: Thematic investing can provide diversification beyond traditional asset classes, potentially reducing risk by spreading investments across a range of companies or assets connected to a specific theme. Growth potential: Themes and trends can lead to high-growth opportunities. Investing in sectors or technologies expected to expand rapidly can offer the potential for attractive returns.
- Alignment with values: Thematic investing allows investors to align their portfolios with their beliefs and values. For example, those concerned about environmental issues can invest in clean energy themes.
- Innovation exposure: Thematic investing often involves emerging industries and disruptive technologies, offering exposure to innovation and potentially benefiting from market shifts.
- Tailored portfolios: Investors can customize their portfolios based on their outlook and convictions about specific themes, which may lead to more personalized and focused investment strategies.
Investing in themes can benefit both clients and advisers. By learning and investing in specific themes, advisers can become more engaged with clients by helping them understand what’s driving the market and news cycles.
What is VanEck’s approach to thematic investing?
A unique attribute of VanEck’s thematic suite is our focus on what we see as long-term secular trends among industries that we believe are likely to drive long-term performance. VanEck approaches thematic ETFs with a focus on pure-play exposures, meaning that companies included in most of our portfolios must derive 50% of revenues from the specific theme on which they are focused.
What are some misconceptions about thematic investing?
Some of the biggest misconceptions about thematic investing are that it is simply chasing fads or you only get exposure to large tech companies like Apple, Nvidia, or Microsoft. Thematic investing involves selecting investments based on specific themes or trends rather than traditional factors like sectors or geographic regions. Here are some common misconceptions about thematic investing:
- It's only for niche or speculative themes: Thematic investing can cover many themes, from technology and healthcare to sustainability and demographics. It's not limited to niche or speculative ideas.
- It's a short-term strategy: Thematic investing can be short-term and long-term, depending on the theme and the investor's goals. Some themes may play out over many years, making them suitable for long-term investment.
- It's risk-free: Thematic investments can be riskier than broad-market investments. If a theme doesn't materialize as expected or faces regulatory challenges, it can result in losses.
- It's always a high cost: While some thematic ETFs and funds may have higher expense ratios, not all thematic investments are costly. Investors can choose cost-effective options and tailor their thematic strategy to their budget.
- It's incompatible with diversification: Thematic investing can be diversified within the chosen theme. Investors can select multiple companies or assets within a theme to spread risk while focusing on the desired trend.
- It's purely based on trends, not fundamentals: Successful thematic investing combines a thematic approach with fundamental analysis. It's important to assess the companies' or assets' financial health and growth potential within the chosen theme.
- It's primarily for retail investors: Institutional investors also engage in thematic investing, recognizing the long-term potential of specific themes in their portfolios.
- It's the same as sector investing: While thematic investing may overlap with sector investing, it's distinct. Thematic investing focuses on broader, cross-sector trends that may cut across multiple industries.
What are some of the significant thematic trends?
- Clean Energy and Renewable Technologies: With a growing emphasis on combating climate change, investments in clean energy sources like solar, wind, and electric vehicles rose.
- Technology and Innovation: Themes like artificial intelligence, automation, and cybersecurity continued to attract investment due to their transformative potential.
- Healthcare and Biotechnology: Healthcare innovation, biotech research, and telemedicine investments were driven by an aging population and the ongoing pandemic.
- Digital Assets and Fintech: The digitalization of financial services and the rise of cryptocurrencies were significant themes in investing.
- Genomics and Precision Medicine: Advances in genomics and personalized medicine were gaining attention for their potential to revolutionize healthcare.
- Infrastructure and Urbanization: As cities expanded and aging infrastructure required upgrades, investments in smart cities, transportation, and infrastructure development were growing.
- Water and Resource Scarcity: As water resources became scarcer in some regions, investments in water-related technologies and resource management gained importance.
- Aging Population: Investing in companies addressing the needs of the aging population, including healthcare, senior living, and retirement solutions.
- Cybersecurity: With the increasing reliance on digital technology, investments in companies providing cybersecurity solutions were in demand.
- ESG (Environmental, Social, and Governance) Investing: Investors increasingly focus on companies with strong sustainability practices and ethical governance.
How can investors use ETFs to get access to market themes?
ETFs can be valuable tools for investors seeking to participate in specific and targeted economic opportunities. Often, these are referred to as “themes, " which may be based on advancements such as technology or can be solution-driven—solutions investors seek to combat particular market conditions, like inflation. While ETFs that target themes generally tend to be concentrated, their addition to a portfolio is intended to add value from a return perspective and aid with diversification and overall risk. VanEck has purpose-built various ETFs for accessing timely and relevant trends shaping the modern investment landscape.
| Fund | Demographics | Automation | Energy | Disruptive Technology | Healthcare Innovation | Infrastructure | Reshoring | Resource Scarcity | Sustainability |
| Agribusiness ETF MOO | ■ | ■ | ■ | ||||||
| Biotech ETF BBH | ■ | ■ | ■ | ||||||
| Bitcoin ETF HODL | ■ | ■ | ■ | ||||||
| Commodity Strategy ETF PIT | ■ | ||||||||
| Digital India ETF DGIN | ■ | ■ | ■ | ■ | |||||
| Digital Transformation ETF DAPP | ■ | ■ | |||||||
| Energy Income ETF EINC | ■ | ■ | ■ | ■ | |||||
| Environmental Services ETF EVX | ■ | ■ | |||||||
| Gaming ETF BJK | ■ | ||||||||
| Gold Miners Equity ETF GDX | ■ | ||||||||
| Green Bond ETF GRNB | ■ | ||||||||
| Green Metals ETF GMET | ■ | ■ | ■ | ■ | |||||
| HIP Sustainable Muni ETF SMI | ■ | ■ | |||||||
| Real Assets ETF RAAX | ■ | ||||||||
| Junior Gold Miners ETF GDXJ | ■ | ||||||||
| Low Carbon Energy ETF SMOG | ■ | ■ | ■ | ■ | ■ | ||||
| Morningstar ESG Moat ETF MOTE | ■ | ||||||||
| Office and Commercial REIT ETF DESK | ■ | ■ | |||||||
| Oil Refiners ETF CRAK | ■ | ||||||||
| Oil Services ETF OIH | ■ | ■ | |||||||
| Pharmaceutical ETF PPH | ■ | ■ | ■ | ||||||
| Rare Earth/Strategic Metals ETF REMX | ■ | ■ | ■ | ||||||
| Retail ETF RTH | ■ | ■ | ■ | ||||||
| Robotics ETF IBOT | ■ | ■ | ■ | ■ | ■ | ■ | |||
| Semiconductor ETF SMH | ■ | ■ | ■ | ||||||
| Steel ETF SLX | ■ | ||||||||
| Uranium+Nuclear Energy ETF NLR | ■ | ■ | ■ | ||||||
| Video Gaming and eSports ETF ESPO | ■ | ■ | |||||||
| VanEck Onchain Economy ETF NODE | ■ | ■ | ■ | ■ |
How can investors learn more about thematic investing?
Investors who subscribe to VanEck’s thematic investing insights can expect timely updates on the new and evolving discoveries and innovations potentially driving future performance across various industries.
To receive more Thematic Investing insights, sign up in our subscription center.
Important Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
VanEck Onchain Economy ETF (NODE) Disclosures
The Fund may invest nearly all of its net assets in either Digital Transformation Companies and/or Digital Asset Instruments. The Fund does not invest in digital assets or commodities directly.
An investment in the Fund involves a substantial degree of risk and is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund is not a deposit with a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Therefore, you should consider carefully various risks before investing in the Fund, each of which could significantly and adversely affect the value of an investment in the Fund.
Digital asset instruments may be subject to risks associated with investing in digital asset exchange-traded products (“ETPs”), which include the historical extreme volatility of the digital asset and cryptocurrency market, as well as less regulation and thus fewer investor protections, as these ETPs are not investment companies registered under the Investment Company Act of 1940 (“1940 Act”) or commodity pools for the purposes of the Commodity Exchange Act (“CEA”).
VanEck Bitcoin ETF (HODL) Disclosures
This material must be preceded or accompanied by a prospectus. An investment in the VanEck Bitcoin ETF ("HODL" or the "Trust") may not be suitable for all investors. Before investing you should carefully consider the Trust's investment objectives, risks, charges and expenses.
Investing involves significant risk, and you could lose money on an investment in the Trust. The value of Bitcoin is highly volatile, and the value of the Trust’s shares could decline rapidly, including to zero. You could lose your entire principal investment. For a more complete discussion of the risk factors relative to the Trust, carefully read the prospectus.
The Trust's investment objective is to reflect the performance of the price of Bitcoin less the expenses of the Trust's operations. The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of Bitcoin.
The Trust is not an investment company registered under the Investment Company Act of 1940 (“1940 Act”) or a commodity pool for the purposes of the Commodity Exchange Act (“CEA”). Shares of the Trust are not subject to the same regulatory requirements as mutual funds. As a result, shareholders of HODL do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.
An investment in the Trust is subject to risks which include, but are not limited to, the historically and potentially future extreme volatility of bitcoin, various potential factors that may adversely affect the liquidity of Trust shares, the limited history of the Index from which the value of bitcoin and hence the value of Trust shares will be determined, potential threats to the Trust’s bitcoin custodian, and the unregulated nature and lack of transparency surrounding the operations of bitcoin trading platforms, all of which may ultimately adversely affect the value of shares of the Trust. Please note that this is not an exhaustive list of risks pertaining to the Trust. Please read carefully the prospectus for a complete list of potential risks.
Because shares of the Trust are intended to reflect the price of the Bitcoin held in the Trust, the market price of the shares is subject to fluctuations similar to those affecting Bitcoin prices. Additionally, shares of the Trust are bought and sold at market price, not at net asset value (“NAV”). Brokerage commissions will reduce returns.
Trust shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of Trust shares relates directly to the value of the Bitcoin held by the Trust (less its expenses), and fluctuations in the price of Bitcoin could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the Bitcoin represented by them. The Trust does not generate any income, and as the Trust regularly issues shares to pay for the Sponsor’s ongoing expenses, the amount of Bitcoin represented by each Share will decline over time.
This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.
The Sponsor of the Trust is VanEck Digital Assets, LLC. The Marketing Agent for the Trust is Van Eck Securities Corporation. VanEck Digital Assets, LLC., and Van Eck Securities Corporation are wholly-owned subsidiaries of Van Eck Associates Corporation.
© Van Eck Associates Corporation, 666 Third Avenue, New York, NY 10017
Phone: 800.826.2333
Email: [email protected]
General VanEck ETF Risks
The principal risks of investing in VanEck ETFs include sector, market, economic, political, foreign currency, world event, index tracking, active management, social media analytics, derivatives, blockchain, commodities and non-diversification risks, as well as fluctuations in net asset value and the risks associated with investing in less developed capital markets. The Funds may loan their securities, which may subject them to additional credit and counterparty risk. ETFs that invest in high-yield securities are subject to subject to risks associated with investing in high-yield securities; which include a greater risk of loss of income and principal than funds holding higher-rated securities; concentration risk; credit risk; hedging risk; interest rate risk; and short sale risk. ETFs that invest in companies with small capitalizations are subject to elevated risks, which include, among others, greater volatility, lower trading volume and less liquidity than larger companies. Please see the prospectus of each Fund for more complete information regarding each Fund’s specific risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
Related Funds
Important Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
VanEck Onchain Economy ETF (NODE) Disclosures
The Fund may invest nearly all of its net assets in either Digital Transformation Companies and/or Digital Asset Instruments. The Fund does not invest in digital assets or commodities directly.
An investment in the Fund involves a substantial degree of risk and is not suitable for all investors. Investors in the Fund should be willing to accept a high degree of volatility in the price of the Fund’s Shares and the possibility of significant losses. An investment in the Fund is not a deposit with a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Therefore, you should consider carefully various risks before investing in the Fund, each of which could significantly and adversely affect the value of an investment in the Fund.
Digital asset instruments may be subject to risks associated with investing in digital asset exchange-traded products (“ETPs”), which include the historical extreme volatility of the digital asset and cryptocurrency market, as well as less regulation and thus fewer investor protections, as these ETPs are not investment companies registered under the Investment Company Act of 1940 (“1940 Act”) or commodity pools for the purposes of the Commodity Exchange Act (“CEA”).
VanEck Bitcoin ETF (HODL) Disclosures
This material must be preceded or accompanied by a prospectus. An investment in the VanEck Bitcoin ETF ("HODL" or the "Trust") may not be suitable for all investors. Before investing you should carefully consider the Trust's investment objectives, risks, charges and expenses.
Investing involves significant risk, and you could lose money on an investment in the Trust. The value of Bitcoin is highly volatile, and the value of the Trust’s shares could decline rapidly, including to zero. You could lose your entire principal investment. For a more complete discussion of the risk factors relative to the Trust, carefully read the prospectus.
The Trust's investment objective is to reflect the performance of the price of Bitcoin less the expenses of the Trust's operations. The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of Bitcoin.
The Trust is not an investment company registered under the Investment Company Act of 1940 (“1940 Act”) or a commodity pool for the purposes of the Commodity Exchange Act (“CEA”). Shares of the Trust are not subject to the same regulatory requirements as mutual funds. As a result, shareholders of HODL do not have the protections associated with ownership of shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.
An investment in the Trust is subject to risks which include, but are not limited to, the historically and potentially future extreme volatility of bitcoin, various potential factors that may adversely affect the liquidity of Trust shares, the limited history of the Index from which the value of bitcoin and hence the value of Trust shares will be determined, potential threats to the Trust’s bitcoin custodian, and the unregulated nature and lack of transparency surrounding the operations of bitcoin trading platforms, all of which may ultimately adversely affect the value of shares of the Trust. Please note that this is not an exhaustive list of risks pertaining to the Trust. Please read carefully the prospectus for a complete list of potential risks.
Because shares of the Trust are intended to reflect the price of the Bitcoin held in the Trust, the market price of the shares is subject to fluctuations similar to those affecting Bitcoin prices. Additionally, shares of the Trust are bought and sold at market price, not at net asset value (“NAV”). Brokerage commissions will reduce returns.
Trust shares trade like stocks, are subject to investment risk and will fluctuate in market value. The value of Trust shares relates directly to the value of the Bitcoin held by the Trust (less its expenses), and fluctuations in the price of Bitcoin could materially and adversely affect an investment in the shares. The price received upon the sale of the shares, which trade at market price, may be more or less than the value of the Bitcoin represented by them. The Trust does not generate any income, and as the Trust regularly issues shares to pay for the Sponsor’s ongoing expenses, the amount of Bitcoin represented by each Share will decline over time.
This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.
The Sponsor of the Trust is VanEck Digital Assets, LLC. The Marketing Agent for the Trust is Van Eck Securities Corporation. VanEck Digital Assets, LLC., and Van Eck Securities Corporation are wholly-owned subsidiaries of Van Eck Associates Corporation.
© Van Eck Associates Corporation, 666 Third Avenue, New York, NY 10017
Phone: 800.826.2333
Email: [email protected]
General VanEck ETF Risks
The principal risks of investing in VanEck ETFs include sector, market, economic, political, foreign currency, world event, index tracking, active management, social media analytics, derivatives, blockchain, commodities and non-diversification risks, as well as fluctuations in net asset value and the risks associated with investing in less developed capital markets. The Funds may loan their securities, which may subject them to additional credit and counterparty risk. ETFs that invest in high-yield securities are subject to subject to risks associated with investing in high-yield securities; which include a greater risk of loss of income and principal than funds holding higher-rated securities; concentration risk; credit risk; hedging risk; interest rate risk; and short sale risk. ETFs that invest in companies with small capitalizations are subject to elevated risks, which include, among others, greater volatility, lower trading volume and less liquidity than larger companies. Please see the prospectus of each Fund for more complete information regarding each Fund’s specific risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.