Thematic investing – now in Canada

A new way to help build your business with alternative investment solutions.

What sets you apart? For advisors, that’s the million-dollar question, in the sense that answering it in a compelling way can potentially land you the million-dollar account. The trouble is, it’s difficult to stand out when you operate only within the traditional investing environment.

What if you could make meaningful connections with your clients? By offering innovative investment solutions that capitalize on the global trends they read about every day – for example, globalization, democratization, sustainability and a focus on health? Thematic investing, an approach that’s available in Canada through the Manulife Global Thematic Opportunities Fund, aims to identify companies that will succeed in the future by focusing on the structural forces shaping our world, or “megatrends.”

By enabling investors to participate in these megatrends, thematic investing engages them, and thus gives you the opportunity to connect with clients on issues that are important to them. Equally important, because thematic investments are so different from traditional index-based and index-benchmarked investments, adding them to your product shelf can be an effective way to differentiate your advice.

How does thematic investing work?

Traditional investing tends to be backward-looking. It often bases decisions on a company’s past results – despite the fact that that past performance is not necessarily indicative of future returns. Certainly, the companies that make up an index earned their place there based on what they have done, not what they will do.

By contrast, thematic investing is forward-looking. It starts by identifying megatrends – major long-term shifts that are changing the social, economic and investing landscape – and then looks for the individual companies best positioned to benefit from those megatrends over the coming decades.

Thematic opportunities often present themselves as specialized businesses operating in the world’s most dynamic industries. These companies tend to be small to mid-sized today, and they may not have the scale to make it into today’s indexes. But they have the potential to dominate the indexes of tomorrow.

What exactly is a megatrend?

“Megatrends” certainly sound impressive – but what do they look like in practice? Here are some examples that may be incorporated into the analysis of potential holdings in a portfolio of global thematic opportunities:

  • Network economy
  • Sustainability
  • Knowledge society
  • Immaterialization
  • Democratization
  • Acceleration and complexity
  • Technology development
  • Economic growth
  • Individualization
  • Commercialization
  • Globalization
  • Polarization
  • Focus on health
  • Demographic development

None of these are temporary fads. Each will have an enduring impact on multiple themes. At the same time, each theme is likely to be affected by more than one megatrend. That is, megatrends often intersect to form investable themes – for example, the megatrends of sustainability, focus on health, technology development, economic growth and globalization all have the common theme of clean energy.

From ideas to investments

At Pictet Asset Management, we take a highly disciplined approach that helps us distinguish a truly enduring megatrend from a temporary fad. Having identified these megatrends, with the help of advisors, we have creted thematic strategies that enable investors to capitalize on the opportunities that they present. We adopt a global thematic approach that both ignores the constraints to benchmarks and seeks to capitalize on the secular trends shaping our world. Where megatrends connect, powerful themes emerge. Clean Energy: Economic growth, Globalization, Focus on health, Technology development and Sustainability. Network economy, The increasing connectedness of business processes and economic activity, enabling the transfer of knowledge and goods directly from the provider to the receiver. Sustainability, The ability to meet certain needs without compromising the ability of future generations to meet theirs. Knowledge society, Knowledge is becoming an economic resource in the way raw materials, labour and capital. Immaterialization, Consumers are increasingly focusing on the intangible qualities of products and services, such as their ethical or aesthetic appeal, rather than their material attributes. Democratization, More power to the people – politically, economically and culturally. Acceleration and complexity, The increase in the rate of technological progress over time, resulting in products having a shorter shelf life. Technology development, The application of science and knowledge to commercial or industrial processes. Economic growth, The increase in the world’s capacity to produce goods and services. Individualization, The evolution of a society once characterized by collective norms to one in which freedom of choice and the expression of one’s individuality are more dominant. Commercialization, The process of increasing the efficiency of a sector by transforming it into a commercial business. Globalization, The increasing global connectedness and flow of people, capital, products, services, information, technology and culture. Polarization, When extremes grow at the expense of the middle round. Focus on health, Ageing populations, rising wealth and technological advances are making health a major source of expenditure for governments, organizations and individuals across the world. Demographic development, The widening demographic divide between countries with younger workers and those, mostly in the West, with an ageing and shrinking workforce.

Thematic investing involves discovering and identifying interactions between megatrends and then finding companies focused on an activity that may benefit from those interactions. In clean energy, that may mean businesses that are constructing and operating smart buildings, developing smart grids, creating solar, wind and hydroelectric renewable energy, or producing low-carbon energy such as natural gas.

By finding companies that share a common mission of creating solutions to some of our biggest challenges, but that operate in different sectors with different specialties, the Manulife Global Thematic Opportunities Fund in particular can provide diversified exposure to the future.


Just 12 per cent of Fortune 500 firms in 1955 still made the list in 2017 – 60 out of 500¹ – and, in our fast-paced world, the speed of replacement may be ramping up. One study suggests that half of the firms in today’s S&P 500 Index will be off the list within 10 years.² Thematic investing seeks companies with the potential to replace them.

Your business growth opportunity

With the Manulife Global Thematic Opportunities Fund, we’re providing you with a fresh way to get your clients excited about investing.

Gertjan van der Geer, Senior Investment Manager at Pictet Asset Management, sees the Manulife Global Thematic Opportunities Fund fitting into the core equity component of an investor’s portfolio. “It matches very nicely with a passive equity stake,” he explains. “If you have passive, you want to pair it with something that is truly active and not closet indexing, and a fund such as this one truly is active. Its active share is extremely high versus the MSCI World [Index].”

Global Thematic Opportunities

This cluster diagram shows the various investment themes that arise from Pictet's analysis of global megatrends. They are: security, biotech, digital, nutrition, health, timber, SmartCity, clean energy, premium brands, global environmental opportunities, robotics and water.

The recommended time horizon for Manulife Global Thematic Opportunities Fund investors is a minimum of five years.

Thematic investing enables investors to put their money into ideas they feel passionate about. In other words, their return on investment can be bigger than simply financial, and they can become invested – in every sense of the word – in the solutions you propose.

That’s good for your clients, because when they embrace an investment approach wholeheartedly, they’ll be more likely to hold on to it through short-term volatility and benefit from long-term returns. It’s also good for your practice, because deeply committed investors can be loyal clients and generous ambassadors who share their positive impressions of you with friends and family and, over time, help you build a more successful business.

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Advisor Focus Magazine

Advisor Focus Magazine

Manulife Investment Management

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