Trends with Benefits #67: Thematic Investing with Chris Versace

In this episode, I speak with Chris Versace, Chief Investment Officer of Tematica Research, about the growth of thematic investing. While thematic investing isn’t a new concept, in recent years it has really taken on new life. ETFs in particular have helped make it easier for investors to target and trade a basket of securities for nearly any given investment trend. At the same time, with the plethora of new thematic funds out there, investors are faced with the novel complexities of figuring out how to incorporate them into a portfolio.

More than a Catchy Name

I’ve been looking to cover the idea of thematics for a while and I was excited to speak to Chris about his research and approach. If you follow financial media, you will have undoubtedly heard commentators, like others and myself, say, “make sure you understand what’s inside a fund” before investing in it. This is never truer than when it comes to selecting a thematic fund. More than just a catchy name, a thematic fund is a collection of securities chosen based on certain criteria, which may or may not result in the type of exposure you expect. More important is understanding how that collection of securities interacts with the rest of your portfolio. Are you just overweighting exposure you already have in other parts of your portfolio? Are you taking on other risks you didn’t expect? Is the trend really a trend or just a fad?

Chris and I talk about how themes are different than sectors, his framework for identifying a theme, the characteristics investors should consider when incorporating a thematic fund in a portfolio, and some of the long-term themes he’s watching.