Thematic investment can be a powerful tool to vault your portfolio past the myriad of obstacles that can plague the moment. If you’re locked into the right disruptive megatrends, you won’t have to stand by and watch inflation gobble up your portfolio or volatility strike it down. However, the right themes can be hard to spot in advance, even if they feel absolutely inevitable in hindsight.
In twenty years, “smart materials” may prove to be one such under-the-radar, yet ultimately inevitable theme.
Smart materials are those that can be controlled or manipulated by external stimuli, such as light, temperature, electric current, and more. Think about what temperature-sensitive coating could do for aircraft wings, for example, or the possibilities of drugs that could release themselves into the bloodstream by nanobots at the first sign of infection.
Other possibilities could lead to improved quality of life. Consider buildings that could react to the weather or allow your neighbor to blast their stereo while leaving you in complete silence. Or what if your computer battery could last for months before needing a charge, or your shirt was more durable than steel but still felt like linen?
Though all of these technologies reflect divergent industries, they are all rooted in smart materials. In 2019, the global smart material market was valued at $44 billion; the industry is projected to reach $110 billion by 2026, according to a 2020 Brand Essence report.
The Stuff That Stuff Will Be Made Of
The ProShares Smart Materials ETF (TINT) tracks companies that develop, research or produce smart materials.
TINT’s holdings include companies like PPG Industries (4.4%), Universal Display Corporation (3.6%), and View Inc. (2.9%).
PPG Industries focuses on paints and coatings that have a staggering amount of uses beyond simple aesthetics. Universal Display Corporation is the company responsible for the OLED screen on your brand new Switch and very likely the one on your cellphone as well, while View Inc. creates windows that could make you healthier while also cutting your energy costs.
All these companies are making the future iterations of common, everyday things that, though we don’t often consider in the moment-to-moment of our lives, have a profound impact on how we live.
As an investment theme, smart materials may also have tremendous upside from the sheer amount of products in development.
One such example is materials that assemble themselves–not just at the component level, but tiny molecules. Jasna Brujic, study researcher and professor at the department of physics at New York University, wrote in a paper published in Proceedings of the National Academy of Sciences that, “We show that one can program particles to make tailored structures with customized properties. While cranes, drills, and hammers must be controlled by humans in constructing buildings, this work reveals how one can use physics to make smart materials that ‘know’ how to assemble themselves.”
As of Sept. 30, TINT’s top three sector exposures included materials (67.9%), information technology (17.0%), and industrials (13.0%).
TINT has an expense ratio of 0.58%.
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