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Good Story, Bad Investment

Thematic ETFs often come with a good story attached but that doesn't mean they're sound investments

Alex Bryan 28 October, 2020 | 19:16

Thematic exchange-traded funds typically come with a good investment story, often seeking to capitalise on well-publicised long-term macro trends that transcend the business cycle. These include things like the increasing adoption of robotics and artificial intelligence, electric vehicles and genetic research, or demographic shifts.

But good stories are often the best thing these funds have going for them; they don’t necessarily make sound investments. Anyone considering investing in one should exercise caution and be sure to do their homework before buying.

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About Author

Alex Bryan

Alex Bryan  Alex Bryan, CFA is the Director of Passive Fund Research with Morningstar.

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