The landscape of sustainable investing is constantly evolving, and thematic products have emerged as a powerful tool for institutional investors seeking to align their portfolios with environmental, social, and governance (ESG) goals. But navigating this space requires careful consideration. Here’s why thematic investments are crucial and what makes them tick.
Why Thematic Products Matter:
- Targeted Impact: Thematic products go beyond broad ESG integration. They allow investors to focus on specific sustainability challenges such as clean water or renewable energy, driving positive impact in a defined area.
- Enhanced Transparency: Thematic products provide clear visibility into the underlying companies and their contributions to the chosen theme. This transparency fosters trust and allows investors to understand the impact they’re generating.
- Long-term Value Creation: Thematic products often target companies at the forefront of sustainability solutions. These companies are well positioned for growth in a future increasingly focused on environmental and social responsibility.
Building Successful Thematic Products: The Essentials
- Rigorous Universe Construction: Selecting the right companies is paramount. Thematic universes must be meticulously constructed to ensure companies genuinely contribute to the chosen theme and avoid greenwashing.
- Impact Assessment Methodology: An objective and robust impact assessment methodology is crucial. It should go beyond reported data and delve into a company’s products, services, and their true environmental and social footprint.
- Long-Term Viability: Successful thematic products consider not just immediate impact but also the long-term viability of the chosen theme. Understanding future trends and regulations is key to ensuring the product delivers sustained value.
Ready to Harness the Power of Thematic Investing?
Thematic products offer a compelling path for institutional investors to achieve their sustainability goals while generating long-term returns. By partnering with a trusted provider who prioritizes rigorous universe construction and objective impact assessments, you can unlock the full potential of thematic investing.
We invite you to explore how Inrate’s expertise can empower you to build impactful and successful thematic products. Contact us today to learn more!
Contributors
Dr. Moritz Reisser
Co-Head of Research
Mónica Goddard
Chief ESG Analyst