Advisors and investors don’t lack options when it comes to thematic investing strategies. The thematic index ETF suite from Fidelity can offer exposure to many of the long-term disruptors looking ahead and may be worth consideration.
Thematic investing allows investors to express where they believe notable opportunity lies looking ahead. From megatrends and outcome-oriented strategies to those more sustainable, thematic investing enables investors to customize and align their portfolios with their personal interests and outlooks.
“Thematic investing strategies focus on finding potential opportunities created by economic, technological, and social developments that unfold over long periods of time,” Fidelity explained in a Viewpoints article.
This style of investing often cuts across sectors, regions, and market caps in pursuit of a strategy’s focus.
Investing in thematic strategies through ETFs combines the potential lower costs, transparency, and trading flexibility of the ETF wrapper with exposure to long-term trends. As with any investment, it’s important to understand what’s under the hood of a thematic ETF.
Some thematic strategies offer broad exposure across multiple themes. Other thematic strategies may offer more targeted, concentrated exposures. Understanding the types of exposure may offer more efficient positioning to support an investor’s risk and return profile. A broader-focused strategy may carry a different risk profile than a more concentrated one.
“Thematic funds also allow investors to diversify their investment in a theme,” the Fidelity article explained. “Not all companies will benefit equally from their connection to a theme. Investing in a fund with many stocks connected to that theme can spread the risk.”
Fidelity offers a variety of passive thematic ETFs focused on disruption. All five funds carry an expense ratio of 0.39%, making them a potentially attractive addition when thematic investing.
The firm also offers a range of actively managed, disruptive, thematic ETFs. You can read more about the suite at “An Advisor’s Guide to Fidelity’s Disruptive ETF Suite”.
Total returns as of 07/18/2024
Investing in Disruption
Thematic investing themes focused on disruption seek to capitalize on the rapid shifts that technological evolutions bring. Current long-term disruptive themes include those focused on autonomous vehicles, cloud computing, blockchain technology, digital payments, and more.
The Fidelity Digital Health ETF (FDHT) seeks to track the Fidelity Digital Health Index. The Index includes companies globally across market caps with businesses in connected healthcare devices, surgical robots, and that provide healthcare records management. It also includes companies working in telemedicine and other products and services within technology-enabled healthcare.
The Fidelity Cloud Computing ETF (FCLD) seeks to track the Fidelity Cloud Computing Index. The Index invests globally and across market caps in those companies providing services or products that support or enable increased cloud computing adoption. These companies deliver computing services via the internet.
The Fidelity Metaverse ETF (FMET) seeks to track the Fidelity Metaverse Index. The Metaverse describes a future internet characterized by blending augmented and virtual reality. It includes persistent shared environments where users interact and transact. The Index includes companies working on manufacturing, developing, distributing, or selling services or products that enable or build the Metaverse.
The Fidelity Crypto Industry and Digital Payments ETF (FDIG) seeks to track the Fidelity Crypto Industry and Digital Payments Index. The Index includes global companies involved in cryptocurrencies, blockchain technologies, and digital payment processing.
he Fidelity Electric Vehicles and Future Transportation ETF (FDRV) seeks to track the Fidelity Electric Vehicles and Future Transportation Index. The Index includes companies globally that produce electric and/or autonomous vehicles. It also includes companies that manufacture the components, technology, or energy systems for these vehicles. It also includes companies that seek to change the future of transportation.
For more news, information, and strategy, visit the ETF Investing Channel.
Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.
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