Thematic Investing: Investors See the Trends, Not the Entry Point
They view artificial intelligence as the major economic shift of the decade. They don’t know how to gain exposure to it. A survey conducted by Opinium for WisdomTree among 4,000 European investors shows that 77% of French respondents say they are unfamiliar with thematic investing. The issue is less one of appetite than of method.
A Gap Between Belief and Allocation
The survey was conducted among 1,000 people in each of the following countries: the United Kingdom, France, Germany, and Italy, all of whom had at least 5,000 euros in savings or investments. In France, 77% say they are unfamiliar with thematic investing. Six out of ten say they are unable to identify themes likely to outperform in the medium term.
There is no doubt, however, about the interest in underlying trends. When asked about the themes expected to gain momentum over the next five years, 34% cited AI-related software and 24% cited the associated infrastructure. But when asked how to access them, the most common response was “I don’t know,” at 19%. Thematic ETFs—which, despite having more than $115 billion in assets under management in Europe—were mentioned by only 12% of respondents.
Caution as a Reflex
What stands out in the responses is not so much ignorance as mistrust. More than one in two respondents—54%—refuse to limit themselves to a single theme for fear of missing out on other opportunities. And 45% prefer exposure to two or three themes to balance their portfolio. Market uncertainty is cited as a deterrent by 32% of those surveyed, while regulatory or political risk is cited by 21%.
This caution is healthy—and this must be stated clearly—because the marketing rhetoric surrounding thematic funds has a lot to answer for.
What the Survey Doesn't Say
The study was conducted by an ETF provider that manages $9.6 billion across 21 thematic funds listed in Europe. Its conclusion—which was predictable—is that there is a need to improve education about thematic investing in France. It isn't wrong. It's just incomplete.
What she fails to mention is the original sin of thematic investing: these funds almost always arrive after the rally has already begun. A theme becomes marketable once it’s already in the news—and thus reflected in stock prices. Fund launches focused on blockchain, cannabis, the metaverse, or clean energy followed the same pattern, and many investors bought in at the peak. The recurrence of these same dynamics in the AI sector warrants the same level of skepticism.
Second concern: concentration. A thematic AI ETF often holds the same stocks as a global index fund, but with much higher weightings and management fees that are two to four times higher. Investors who already hold an MSCI World fund automatically have significant exposure to these stocks. They may end up paying twice for the same risk.
What’s Actually in a Thematic Fund
A quick vocabulary note, because it shapes everything else. A thematic fund does not track a sector as defined by stock market classifications, but rather an idea: an aging population, cybersecurity, water, robotics. The fund manager—or the index the fund tracks—selects companies expected to benefit from these trends, regardless of the sector they belong to.
This freedom is precisely what makes the task difficult. Two funds both labeled “artificial intelligence” may have very different portfolios—one focused on semiconductor manufacturers, the other on software companies or data center operators. As a result, their performance can vary wildly, even though they share the same theme. The index methodology, published in the key information document, is worth taking ten minutes to read.
A related but useful question: where should this portion be allocated? There are few thematic ETFs eligible for the PEA, as most are invested outside the European Union. Investing through a securities account subjects capital gains to a 30% flat tax, whereas a life insurance policy adds management fees on unit-linked policies but offers more favorable tax treatment after eight years, not to mention the benefits regarding inheritance. The choice of investment vehicle often carries more weight than the choice of theme.
Questions to Ask Yourself Before Investing in a Thematic Fund
There are three key checks to perform before investing in any the The first concerns the fund’s actual composition: review the list of its top ten holdings and compare it to that of a broad-market index you already hold. If the overlap exceeds half, the advertised diversification does not exist. The second concerns total fees, relative to the expected holding period. The third, and most uncomfortable, check concerns the investment horizon: a structural theme plays out over ten or fifteen years, which means weathering 40% declines without selling.
Pierre Debru, Director of European Research at WisdomTree, advocates for “a multi-thematic approach focused on the themes deemed most relevant and promising at the moment.” The argument holds up on paper. In practice, the thematic portion of a retail investor’s portfolio rarely exceeds 10 to 15 percent of the equity allocation. The rest of the portfolio is built with broad-based investments that are less exciting and much less expensive.
