Study reveals poor returns for investors in thematic funds

  • Investors missed out on two-thirds of the gains from thematic funds
  • Thematic funds returned an average of 7.3% per year, but investors had a time-weighted return of just 2.4%
  • The gap in energy transition was 11.9%, and the gap in future mobility was 10.7%
  • Thematic funds are particularly volatile due to their concentration in specific strategies

A recent study by Morningstar has found that investors have missed out on two-thirds of the gains from thematic funds. Thematic funds, which invest in specific strategies such as artificial intelligence, returned an average of 7.3% per year. However, investors only had a time-weighted return of 2.4%. This gap was even wider for specific categories like energy transition and future mobility, with gaps of 11.9% and 10.7% respectively. The study also highlighted that thematic funds, especially exchange-traded funds (ETFs), are more volatile due to their concentration in specific strategies. This research serves as a reminder for investors to carefully consider their investment choices and not solely chase hot-performing funds.

Factuality Level: 7
Factuality Justification: The article provides information from a study conducted by Morningstar on the performance of thematic funds. It includes specific data on the average returns of thematic funds compared to investors’ returns. The article also mentions the gaps in performance for specific thematic categories. However, it lacks specific details on the methodology of the study and does not provide any counterarguments or alternative perspectives.
Noise Level: 3
Noise Justification: The article provides some data and information on the performance of thematic funds compared to non-thematic funds. However, it lacks in-depth analysis, scientific rigor, and actionable insights. It also includes irrelevant information about text-to-speech technology and a request for feedback.
Financial Relevance: Yes
Financial Markets Impacted: Thematic funds, mutual funds, exchange-traded funds
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses the performance of thematic funds and the gap between the returns of these funds and the returns of investors. It provides insights into the impact of investor behavior on returns in the financial markets.
Public Companies: Morningstar (), ARK Innovation ETF (ARKK)
Key People:

Track all markets on TradingView

Reported publicly: www.marketwatch.com