What Defines a Thematic ETF Investment | ETF Trends

As more investors grow comfortable with the exchange traded fund investment vehicle, many are looking at niche or so-called thematic ETFs that help further hone in on potential market opportunities.

“I think it’s a term that’s been used a little loosely, recently,” Jay Jacobs, Head of Research & Strategy, Global X, said at Inside ETFs 2019. “We have a pretty strict definition for thematic, which is identifying the structural trends that are disrupting the global economy and then looking at the companies that stand to benefit from the materialization of those trends.”

For example, the Global X Lithium & Battery Tech ETF (NYSEArca: LIT), Global X Robotics & Artificial Intelligence Thematic ETF (NasdaqGM: BOTZ), Global X Internet of Things Thematic ETF (NasdaqGM: SNSR) and Global X FinTech Thematic ETF (NasdaqGM: FINX) help investors focus towards thematic growth funds, incorporating ideas of sector disruption across info tech, health care, consumer discretionary, materials, industrials, consumer staples and financials.

LIT, the first product that gives investors a way to get exposure to this rare but increasingly popular metal, tracks the full lithium cycle from mining and refining through battery production.

BOTZ provides exposure to companies involved in the adoption and utilization of robotics and artificial intelligence (AI), including those involved with industrial manufacturing, medicine, autonomous vehicles, and other applications.

It is a “very disruptive theme. It’s going to change how things are built, how we get around, how we clean our apartments. Then what are the companies that benefit from that trend – that’s thematic investing,” Jacobs added.

SNSR targets companies involved in the the development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial Internet.

FINX targets companies on the leading edge of emerging financial technology industry, which includes a range of innovations that caters toward businesses engaged in insurance, investing, fundraising and third-party lending through unique mobile and digital solutions.

Watch the full interview between ETF Trends CEO Tom Lydon and Jay Jacobs:

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