Thematic Indices: Looking at the Past or the Future?

Actually, both.

Nicolas Rabener
10 min read
19 Apr 2022

SUMMARY

  • Thematic indices from MSCI have outperformed their benchmark since 2018
  • However, they have a rather unattractive factor mix
  • Going against decades of research is not a sound investment strategy

INTRODUCTION

Although much of the future is uncertain, some technological innovations are rather certain. At some point, we will all have self-driving cars, robots that help us with daily chores, can travel to space, and have artificial intelligence assist us in our jobs and lives.

It is more a question of when rather than if. However, timing is investors’ primary risk when making specific bets on technology and human evolution, compared to passive index investing. Elon Musk’s SpaceX has revolutionized the space industry and created an entire ecosystem of startups dedicated to this space (pun intended).

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