Thematic investing brings a new dimension to the usual asset class categories, resulting in fresh opportunities for investors to diversify portfolios. Themes are structural megatrends that shape societies, affecting economies and redefining business models. The drivers of such trends can be demographic shifts, social or behavioural changes, environmental developments, resource scarcity, economic imbalances, transfer of power, technological advances and regulatory or political changes. Thematic investing allows investors to invest in assets that are better positioned to profit from such transformative changes.
So how should one allocate to these sustainable investment themes in portfolios?