- Thematic ETFs are one of the big investment stories of the last year, with major success in areas such as clean energy
- Yet niche investments come with risks, including the prospect of buying in at the top and structural complications
Traditional exchange traded funds (ETFs) are both extremely useful and incredibly boring. A good S&P 500 ETF gives cheap, diversified exposure to a dynamic market – but it does little to set the pulse racing.
To change all that, see the meteoric rise of thematic ETFs. These products took in a net €9.5bn (£8.2bn) in Europe in 2020, according to Morningstar, with more than half of these inflows directed at energy transition and connectivity-themed funds. The product set is growing apace: a record 17 thematic ETFs launched in 2020, with more still coming.