Half of the 300 institutional investors and intermediaries surveyed by Vontobel Asset Management believe that the pandemic has boosted the case for taking a thematic approach.
The majority (84%) have started to adopt thematic approaches in their portfolios, while 49% intend to increase their allocations over the next three years.
Across Europe, more than half of the respondents already allocate at least a fifth of their equity portfolios according to a thematic approach.
But it’s not just an equity strategy, with a “significant number” of respondents applying a thematic approach across a broad range of asset classes, Vontobel said.
Over two-thirds expect to increase the number of external manager they use for thematic investments over the next 12 months.
Growth priced in already?
UK institutional investors and intermediaries currently have one of Europe’s highest exposures to thematics, with 64% allocating at least 20% to the strategy. This is behind Switzerland (76%), Benelux (75%) and Italy (65%).
A third of UK respondents, however, plan to trim their holdings.
Vontobel suggests that this could reflect the view, held by some early adopters of thematic styles, that elements of the underlying trends have run their course.
A sentiment that is underlined by the 41% of respondents who plan to move away from the style saying that future growth is already priced in.
That said, over the next three years, respondents view the top themes as:
- Urbanisation and Smart Cities (65%)
- Resource Scarcity (57%)
- Climate Change/ESG (57%)
Accelerated trends
Commenting on the survey findings, Sheridan Bowers, head of UK & Ireland at Vontobel Asset Management, noted: “While covid-19 has created a huge level of disruption, many investors expect the longer term impact of the pandemic to further accelerate the underlying trends behind the themes in which they have invested.
“With this in mind, we would expect to see approaches to thematic investment further evolve and mature over time. For most investors, the debate is no longer about whether to invest thematically, but about how to do so most effectively.”
