Benefiting from trends in thematic investing

The key for us is to understand the implications of these secular trends for individual businesses and identify the investable opportunities that arise from these developments.

One concrete illustration is the well-known rise of the technology sector. In our understanding this is an unstoppable trend, led by the digitalisation of our world, that has a direct effect on traditional sectors outside technology, such as healthcare and consumer products. As a consequence, new “winners” are emerging, and it is our goal to identify these early and invest in them in order to gain exposure to the leaders of tomorrow.

“A thematic investment portfolio aims to capture returns that are not available to passive index-tracking investors by picking companies across sectors that are in the sweet spot for benefiting from future growth opportunities.” 

Diane Berkovits

For instance, e-commerce platforms and payments processing companies operate in different sectors of the economy but have much in common: they are innovative and profit from the shift from high street shopping to e-commerce. The addressable market is substantial and growing, as are potential returns. 

If the structural trend is well identified, it is likely to last throughout short-term economic cycles, making for a resilient investment over time. This also helps reduce risks by avoiding potential laggards that are about to be disintermediated.

How we do it 

The first question we ask ourselves when we implement a thematic investment idea is, how valid is this theme in the long term? Of course, answering this question is more art than science. Nevertheless, we can identify a few patterns associated with valid investment themes, such as technological innovation, a change in consumer behaviour and regulatory pressure. What’s most important for us is having the relevant in-house expertise to make these judgements. Expertise is not something that we outsource. Over time, we have built up a team of investment specialists that are experts of their sector and conduct true bottom-up fundamental research. 

What we seek is pure exposure to our investment themes, which often means looking at small, specialised companies as opposed to large blue-chip names that tend to be too diversified. 

“Operationally, our high-conviction themes have to be straightforward to trade, therefore we typically wrap them into in-house certificates with daily liquidity. We manage these certificates actively, since each theme is bound to evolve over time, so stock selection needs to be dynamic.” 

Philippe Henry

Our thematic offering

At UBP, we have been actively developing thematic investment solutions since 2017. So far, we have launched seven thematic equity baskets that reflect three major megatrends shaping the world: innovation, resources, people.

Our Artificial Intelligence certificate has been built around the belief that data is the world’s new oil; the new Consumer certificate is linked to shifting consumer preferences; and the Medical Innovation certificate focuses on innovation in the healthcare sector such as therapeutic innovations and technological innovations like telemedicine.

The ageing of the world’s population is a long-term trend that acts as an accelerator for structural change in the world. In this vein, last year we launched a certificate that selects the leaders of tomorrow in a post-Covid world. More recently, we have designed a Global Recovery certificate that benefits from companies with unrealised recovery potential as well as leading innovative industrial companies that are bound to benefit from the ongoing energy transition.

Diane Berkovits
Senior Portfolio Manager
Go to her Linkedin profile.

Philippe Henry
Global Head of Advisory Services
Go to his Linkedin profile.