The word 'thematic' itself explains the idea-it's all about focusing on a specific theme. Instead of spreading attention across different areas or topics, thematic investing zooms in on one idea. You probably have attended a theme party in your life or thrown a theme party for your friends or colleagues, whether it was centred on vampires, Hindi movies, vintage aesthetics, pirates, superheroes, or any other captivating concept. The essence of a themed party lies in guests immersing themselves in the theme, dressing up as characters or personas according to the chosen theme's context complete with appropriate outfits and accessories.
Similarly, thematic funds also focus on different themes such as energy, technology, MNCs, financial services, PSU, etc. Thematic funds are a type of equity fund that invest in stocks of companies focused on specific themes. These funds aim to capitalise on emerging opportunities by investing in sectors aligned with themes such as manufacturing, innovation, real estate, transportation, technology and pharmaceuticals. Thematic fund investors are able to gain exposure to a focused area of the market that is judged to experience strong growth in the future.
Thematic funds offer investors a way to invest in broader trends and ideas they believe in or expect to shape the future economy. However, are you mixing up sectoral and thematic funds? Let us clarify. Thematic and sectoral funds both invest in companies in a specific industry or sector. The main difference between the two is that sectoral funds focus on companies within a specific industry while thematic funds focus on companies that are related to a specific theme or trend. Thematic funds invest in a theme that embodies an idea or a goal encompassing multiple sectors.
This story is from the May 06, 2024 edition of Dalal Street Investment Journal.
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This story is from the May 06, 2024 edition of Dalal Street Investment Journal.
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