What is Thematic Investing?
Equities are an investment option that can provide higher, faster returns, but they also carry significant risks. Due to information asymmetry, selecting individual stocks to invest in can be difficult.
The only constant in this ever-changing world is change. Disruptive ideas, innovation, economic forces, and natural disasters are constantly reshaping our world. Finding these shifts and investing in businesses that are strategically positioned to profit the most from them are the core principles of thematic investing.
The smallcase platform allows users to create or acquire a theme-based portfolio and manage it. Rather than betting on the broader market, a great investor is always looking ahead and investing in scenarios she believes will come true in the future.
Additionally, it's not always necessary to invest in stocks; one strategy might be to short companies with weak balance sheets or shift one's attention away from a certain industry.
Themes on Smallcase
Smallcase provides ready-made investable themes that are managed by experts. The thesis is also explained on the smallcase page, as well as a blog post and methodology behind it. The theme can be centered on one of several factors.
These can be based on sectors, trend types, quantitative models, popularity, returns, etc
Additionally, you can alter the constituents and weights so that they perfectly reflect your ideals and objectives.
If you can't find a theme you like, you can design your own smallcase and make an investment in it in a practical and economical way.
Is Tt a Good Idea?
Actionable The themes that we see, read, experience, or believe in always have a natural affinity for us. We always say things like, "I believe hotel stocks are a good bet now that COVID is over, or the rise in online delivery is really going to help logistics companies," when talking with our friends. Making such ideas actionable is the goal of thematic investing.
Avoid company-specific risks It also assists you in obtaining the appropriate amount of exposure to a concept. You can invest in the trends and concepts you support because you are investing in a theme with a portfolio of businesses, which means you are never exposed to company-specific risks.
Forward-Looking It is well understood that past market returns are never a reliable predictor of future performance. Thematic investing has the advantage of always having an eye toward the future. You will be a few steps ahead of the market if you capitalize on the right trends.
Examples of Themes
Some examples of themes include –
Launch of the Startup India campaign by the government
Concept or analytical model to screen stocks according to various criteria
Government’s inclination toward privatization and divestment
Cyclical upturn in the infrastructure sector
ESG regulation leading to a move towards carbon neutrality
RBI’s decision to hike the interest rate
Tourism sector bounced back after the pandemic
Conclusion
Thematic investing is an excellent way to fund your ideas.
Smallcase makes it simple by providing thousands of portfolio options.
Check out our Rupeeting Equity portfolios, which aim to outperform the markets across a variety of themes.
The Monopolies portfolio by Rupeeting, for example, invests in companies with a significant market share in niche industries.
It also screens on the basis of pricing power advantage and barriers to entry in the space.