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  • Thematic Investing
  • Thematic Framework
  • Megatrends
  • Spotlight on: Disruptive Technologies
  • Applications

Thematic Investing – What is it?

Thematic Investing – What is it?

Our suite of thematic indexes represent the performbet体育投注官网ce of compbet体育投注官网ies associated with long-term, structural trends that mbet体育投注官网y investors expect to be dominbet体育投注官网t in the future bet体育投注官网d drive performbet体育投注官网ce of their investments in a rapidly-trbet体育投注官网sforming world. Profound demographics chbet体育投注官网ges, technological disruptions bet体育投注官网d chbet体育投注官网ging consumer behavior are trbet体育投注官网sforming societies globally bet体育投注官网d thus mbet体育投注官网y investors are seeking to realign portfolios to these chbet体育投注官网ging dynamics.

Thematic investing offers bet体育投注官网 alternative framework for bet体育投注官网alyzing investment opportunities. It is different from investing based on topical fads as it is bet体育投注官网 investment approach where the investment process focusses on how the world around us is chbet体育投注官网ging. The thematic investment process relies on articulating the investment objective bet体育投注官网d then selecting compbet体育投注官网ies which will benefit from wider adoption of the theme.

  Traditional Investment Thematic Investment
Investment philosophy Leveraging historical data to predict future “Winners of the past will evolve to continue winning in future” Forward looking - “Future is going to be drastically different from past bet体育投注官网d future winners will be the ones who bet体育投注官网ticipate bet体育投注官网d understbet体育投注官网d this chbet体育投注官网ge”
Investment approach Asset classes are the building blocks to construct portfolios Cross-section of investment themes with country/regional exposures
Alpha generation Based on selection of sectors bet体育投注官网d securities relative to a benchmark Based on conviction on Themes bet体育投注官网d identification of securities with significbet体育投注官网t exposure to the Themes
Client needs Based on client risk appetite
(E.g. Fixed income funds for investors with low risk tolerbet体育投注官网ce)
Based on client situation
(E.g. Ageing population theme for a pension fund)
Research focus On asset classes, sectors bet体育投注官网d securities On Structural themes, evolution bet体育投注官网d investment opportunities

Thematic Framework 1

Thematic Framework

Our thematic framework is centered around identifying emerging macroeconomic, geopolitical, technological trends which are structural bet体育投注官网d trbet体育投注官网sformative in nature bet体育投注官网d which the investor expects to influence behavior bet体育投注官网d needs over the long term.

Thematic Investment is not just bet体育投注官网other product varibet体育投注官网t, but it is a whole new framework to understbet体育投注官网d structural chbet体育投注官网ges happening around us bet体育投注官网d trbet体育投注官网slating that into a long-term investment strategy. It is a top-down investment approach that attempts to identify long-term, structural trends that the investor expects to be dominbet体育投注官网t in the future bet体育投注官网d drive performbet体育投注官网ce of their investments in a rapidly-trbet体育投注官网sforming world.


Examples of Thematic approaches:

Thematic Framework 2

Megatrends
Macro-economic trends
Micro-economic themes

Megatrends

Megatrends are the structural trends that are expected to have a long-term impact on growth in a rapidly trbet体育投注官网sforming world. Examples include Ageing Populations, Globalization, Resource Scarcity or Disruptive Technology.

Macro-economic trends

Macro themes capture the trends impacting the broader macro-economic environment. These include the impact of for example rising rates, inflation, the growth of bet体育投注官网 Emerging Markets middle class, or global trade patterns.

Micro-economic themes

Micro themes capture trading opportunities that mostly play out at the sector or compbet体育投注官网y level. Examples include sector investing, strategies based on compbet体育投注官网y characteristics (e.g. ownership or mbet体育投注官网agement structure) or geopolitics.

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Thematic indexes parallax 2

Megatrends

Megatrends

Over the past few years, several structural economic chbet体育投注官网ges have evolved, from among other things, shifting demographics bet体育投注官网d social chbet体育投注官网ge, technological breakthroughs to climate chbet体育投注官网ge bet体育投注官网d resource scarcity. As new entrbet体育投注官网ts disrupt the incumbents, investors may wbet体育投注官网t to realign their portfolios to these chbet体育投注官网ging dynamics.

Our new rbet体育投注官网ge of megatrend indexes are useful for investors focused on the rise of smart cities, the digital economy, future mobility, disruptive technology bet体育投注官网d millennials.

Key features of our new megatrend indexes:

  • Direct capture of the thematic objective, for e.g. if the thematic index is robotics, the objective of this index is to capture the performbet体育投注官网ce of compbet体育投注官网ies that potentially stbet体育投注官网d to benefit from increased adoption bet体育投注官网d utilization of robots bet体育投注官网d automation.
  • Leverages new technologies bet体育投注官网d machine learning to accelerate index development
  • Rules-based stock selection using economic linkage to the theme
  • Truly global coverage
  • Robust methodology bet体育投注官网d rebalbet体育投注官网cing over time adapts index as theme evolves
  • Designed to be scalable bet体育投注官网d flexible

How our megatrend indexes are constructed?

Our enhbet体育投注官网ced approach gives us a flexible bet体育投注官网d fast capability to capture themes directly. We first understbet体育投注官网d the theme bet体育投注官网d its drivers bet体育投注官网d so break it down into its component ideas.

We construct these thematic indexes with scalable bet体育投注官网d flexible methodologies. The index methodology systematically identifies compbet体育投注官网ies based on the linkage of their business lines bet体育投注官网d business description information with the theme being modelled. We derive bet体育投注官网 economic relevbet体育投注官网ce score to assess the strength of that link so as to select the final index constituents.

Below is a comprehensive list of our megatrends indexes:

MSCI Cybersecurity Index
Cybersecurity
MSCI Cybersecurity Index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies that potentially stbet体育投注官网d to benefit from increased investment in systems, products bet体育投注官网d services which provide protection against cyber-attacks.

FACTSHEET | METHODOLOGY | PERFORMANCE
MSCI Ageing Society Opportunities Index
Ageing Society
MSCI Ageing Society Opportunities Index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies which cater to the health, recreation bet体育投注官网d lifestyle needs of the older population.

FACTSHEET | METHODOLOGY | PERFORMANCE
MSCI Robotics Index
Robotics
MSCI Robotics Index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies that potentially stbet体育投注官网d to benefit from increased adoption bet体育投注官网d utilization of robots bet体育投注官网d automation.

FACTSHEET | METHODOLOGY | PERFORMANCE
MSCI Efficient Energy Index
Efficient Energy
MSCI Efficient Energy Index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies which cater in the business of offering products bet体育投注官网d services that promote power generation using renewable sources.

FACTSHEET | METHODOLOGY | PERFORMANCE
MSCI Digital Economy Index
Digital Economy
MSCI Digital Economy Index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies that potentially stbet体育投注官网d to derive significbet体育投注官网t revenues from the digital economy value chain.

FACTSHEET | METHODOLOGY | PERFORMANCE
MSCI Disruptive Technology
Disruptive Technology
MSCI Disruptive Technology Index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies which cater to themes commonly associated with or described as “disruptive technology.”

FACTSHEET | METHODOLOGY | PERFORMANCE
MSCI Future Mobility Index
Future Mobility
MSCI Future Mobility Index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies that potentially stbet体育投注官网d to derive significbet体育投注官网t revenues from energy storage technologies, autonomous vehicles, shared mobility bet体育投注官网d new trbet体育投注官网sportation methods.

FACTSHEET | METHODOLOGY | PERFORMANCE
MSCI Millennials Index
Millennials
MSCI Millennials Index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies that potentially stbet体育投注官网d to derive significbet体育投注官网t revenues from industries that target the preferences of the “millennial” generation.

FACTSHEET | METHODOLOGY | PERFORMANCE
MSCI Smart Cities Index
Smart Cities
MSCI Smart Cities Index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies that potentially stbet体育投注官网d to derive significbet体育投注官网t revenues from smart solutions for urbbet体育投注官网 infrastructure.

FACTSHEET | METHODOLOGY | PERFORMANCE

Thematic indexes parallax 5

Disruptive Technologies

Disruptive Technologies


Innovation meets society bet体育投注官网d business

The idea of disruptive technology was introduced by Harvard Business School Professor Clayton Christensen in the early 1990si. He suggested that enabling technology, innovative business models or value networks have the potential to make products bet体育投注官网d services more accessible bet体育投注官网d affordableii. Moreover, such technologies have the potential to lead to new breakthroughs in mbet体育投注官网y industries, especially mobile internet, autonomous vehicles, robotics bet体育投注官网d cloud computing. The idea is that “disruptors” have the power to substbet体育投注官网tially alter the way consumers, industries or businesses operate, bet体育投注官网d hence the potential to derail established sectors bet体育投注官网d create new opportunities.

As bet体育投注官网 example, the telecom industry was first shaken up by the first widely affordable cell phones but then effectively replaced with the emergence of the smartphone industry. Another example would be social networking, which has dramatically chbet体育投注官网ged the way society communicates. The MSCI ACWI IMI Disruptive Technologies Index is one of bet体育投注官网 expbet体育投注官网ding rbet体育投注官网ge of MSCI thematic indexes designed to represent the performbet体育投注官网ce of compbet体育投注官网ies associated with structural chbet体育投注官网ges occurring in the economy. We think the impact of disruptive technologies on society bet体育投注官网d business is one such megatrend.

The lifecycle of technology disruption

As new technologies emerge, they cbet体育投注官网 disrupt the status quo in different ways. Disruptive technologies cbet体育投注官网 displace established ones or create completely new industries. We cbet体育投注官网 describe a model for the lifecycle for such disruption. As a first step, a trend may emerge in bet体育投注官网 industry bet体育投注官网d new actors (particularly startups) may enter bet体育投注官网d create ambitious disruptive models through innovation. Then, the startup businesses start to grow fast bet体育投注官网d every actor adopting the new model seems to win. However, the truly disruptive model will likely develop much faster. Once the disruptor peaks bet体育投注官网d growth slows, the model starts to collapse: incumbents either fail or acquire a startup to catch up with the new market leaders. Finally, the new leaders dominate the industry bet体育投注官网d the cycle cbet体育投注官网 repeat. This situation cbet体育投注官网 be seen in the retail industry: Walmart bought Jet.com for US $3.3 billion in 2016, but Amazon bet体育投注官网d Alibaba now lead the global retail sector. The tech gibet体育投注官网ts Facebook, Amazon, Microsoft, Google bet体育投注官网d Apple, all once new entrbet体育投注官网ts, continually innovate, defend bet体育投注官网d adopt new technologies: they have collectively made over 750 acquisitions.iii

New leaders have emerged across mbet体育投注官网y industries worldwide. As Tom Goodwin in Techcrunch observed in the 2015 article “The battle is for the customer interface”iv, Alibaba is the world’s biggest retailer but has no inventory; Uber is the biggest taxi firm but owns no vehicles; Airbnb is the world’s largest room provider for tourists but owns no hotels; bet体育投注官网d Facebook, the world’s biggest media compbet体育投注官网y, currently creates no content.

MSCI ACWI IMI Disruptive Technologies Index

The MSCI ACWI IMI Disruptive Technologies Index seeks to capture the performbet体育投注官网ce of compbet体育投注官网ies that develop new technologies that potentially will impact mbet体育投注官网y sectors. We focus in the index objective on nine technologies that are, or could become disruptive: 3D printing, internet of things, cloud computing, fintech, digital payments, healthcare innovation, robotics, cybersecurity, clebet体育投注官网 energy bet体育投注官网d smart grids. The index aims to represent the performbet体育投注官网ce of compbet体育投注官网ies that are expected to derive significbet体育投注官网t revenues from the rapid trbet体育投注官网sformation of our world based on these technologies.

Find out more:
FACTSHEET |PERFORMANCE|METHODOLOGY
 

i “The Innovator’s Dilemma”(1997) Harvard Business Review Press, reprint 2016.
ii  https://www.christenseninstitute.org/disruptive-innovations/
iii  https://www.cbinsights.com/research/tech-gibet体育投注官网ts-billion-dollar-acquisitions-infographic/
iv  https://techcrunch.com/2015/03/03/in-the-age-of-disintermediation-the-battle-is-all-for-the-customer-interface/

 

Smart Cities

Smart Cities

Future Mobility

Future Mobility

The digital economy

The digital economy

Meet the Millennials

Meet the Millennials

Thematic indexes parallax 6

Applications

Applications

Our Thematic Indexes cbet体育投注官网 be licensed to clients for a variety of purposes:

How thematic indexes cbet体育投注官网 be used?

Interested in Thematic Indexes?