What is a thematic ETF?

A thematic ETF is an exchange-traded fund that invests in a specific theme or trend. For example, a thematic ETF might focus on companies involved in renewable energy, cloud computing or artificial intelligence. Thematic ETFs can also focus on broader themes such as sustainability, demographics or innovation.

Should you invest in a thematic ETF?

Rather than investing in a broad market index like the S&P 500, thematic ETFs invest in companies that align with the chosen theme. Thematic ETFs offer investors multiple benefits, including exposure to growing industries. However, these unique funds present risks, such as volatility, that investors should carefully consider before buying shares.

Why are thematic ETFs so popular?

The number of thematic ETFs has increased in recent years, boosted by their appeal to investors wanting to tap into specific industry trends or sectors. This growth has persisted despite challenges to sectors covered by thematic ETFs, underscoring the ongoing attraction of these specialized investment vehicles.