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Morningstar global thematics funds landscape 2022
Executive Summary
The thematic fund market has mushroomed in recent years. These funds attempt to harness secular growth themes ranging from artificial intelligence to Generation Z. Some have delivered phenomenal performance. Others have been duds.
Since we published the first installment of this paper in early 2020, asset managers have ramped up the supply of these niche and often gimmicky funds. Investor demand for clarity and guidance has increased commensurately.
In this report, we introduce an updated taxonomy for classifying these funds based on an enhanced global dataset. Using this framework, we analyze key trends in the global thematic fund landscape.
Key Takeaways
- Investor interest in thematic funds has increased dramatically in recent years, particularly since the beginning of the global coronavirus pandemic. In the trailing two years to the end of 2021, assets under management in these funds have grown nearly threefold to $806 billion worldwide. This represented 2.7% of all assets invested in equity funds globally, up from 0.8% 10 years ago.
- The number of thematic funds has multiplied. A record 589 new thematic funds debuted globally in 2021, more than double the previous record of 271 new launches in 2020.
- We have updated our three-tier taxonomy for classifying thematic funds to help investors make sense of this expansive and diverse universe.
- Europe is the largest market for thematic funds, accounting for 55% of global thematic fund assets.
- Actively managed funds account for the majority of assets invested in thematic funds.
- Funds tracking multiple technology themes, with $105 billion in combined assets, represent the most popular thematic grouping globally.
- Thematic funds tend to spring forth from growth narratives. In total, 72% of thematic funds that plot in the Morningstar Equity Style Box exhibit a growth bias, while just 6% have a value tilt.
- More than a half of the thematic funds in our global universe both survived and outperformed the Morningstar Global Markets Index over the trailing three years to the end of 2021. However, thematic funds' success rate drops to just one in 10 when we look at the trailing 15-year period., More than three fourths of the thematic funds that were available to investors at the onset of that period have since been closed.