Investments on thematic industries such as marijuana, clean energy and solar power showed great performance in the first two months of the year, Sarah Ponczek from Bloomberg reports. Investors in these industries are already seeing a 30% growth. This amounts to thrice more than the average value of the stock market so far.
What exactly are thematic investments?
These are a kind of exchange-traded funds (ETFs) that are considered unique and ‘quirky,’ according to Fidelity Investments. Zacks Investment Research defines these ETFs as making investment decisions by following predictions regarding trends instead of previous performances of the product, company and market. Basically, these are products or services that cater to niche markets.
With the current buzz surrounding medical marijuana legalization, as well as the constant call for greener energy sources in the face of climate change, the industries of cannabis, solar power and clean energy, are proven to be great candidates for thematic investments. Ponczek observes that these sectors are at the helm of industrial and social transformations.
These top three industries are deemed the top three performers in the US. According to Bloomberg, ETFMG Alternative Harvest, which invested in cannabis experienced a spike of around 50%. Meanwhile, funds such as Invesco Solar ETH, Tan and Invesco Wilderhill Clean Energy ETF, PBW experienced an over 30% surge.
Some investors deem thematic investing risky, which could be the reason why investor flow in these industries has not surged despite the great start.