How to Talk to Clients About Thematic ETFs

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There are more than 1,100 thematic ETFs available globally, representing $244 billion in assets. Why the continued flow of investor assets and expanding products in this category? Thematic ETFs are a popular investment vehicle for a growing number of investors, driven by the ongoing trend toward investing in something that sparks passion or reflects one’s belief systems.

In fact, these types of funds are in such demand among investors that, according to some industry experts, 88% of U.S. professional investors plan to increase their allocations to thematic ETFs over the next 12 months. Another survey, this one by Brown Brothers Harriman (“BBH”), noted that “85% of global ETF investors said they plan on increasing exposure to thematic ETFs and 38% of investors plan to allocate 11-20% of their portfolio to thematics, an increase of 4% from 2021.” These growth projections align with the significant uptick in assets invested in thematic ETFs since 2015, which reached $285 billion as of December 2021.