What’s hot and what’s not when it comes to thematics is always shifting, something that is clearly illustrated when we dive into the data.
The 12 most popular thematic equity sectors tracked by Morningstar have seen their combined assets under management rise from £12.3bn to £36bn over the last 10 years. And over that time one upstart – Ecology – has quickly come to dominate the list as interest in environmental, social governance investing has taken off (see below).
Morningstar thematics sectors by assets under management 2012 to present
Ecology funds have dominated in terms of inflows over the last year, attracting £7bn, around seven times the amount taken in by the sector’s closest rival, Infrastructure.
When it comes to individual strategies, over the last year the sector’s ACS Climate Transition World Equity fund has received far more than any other thematic fund in terms of net inflows, at £4bn.
The £8bn portfolio, managed by Jonathan Adams, was launched two years ago and has returned 0.8% over that time against a loss of 8.1% for Citywire’s Ecology sector. The tech-heavy strategy’s top stocks include Apple, Microsoft, Amazon and Alphabet.
The next most popular Ecology funds were the passive World TPI Climate Transition Index Equity fund, which took in £1.19bn over the year, and the UBS Global Equity Climate Transition strategy, which attracted £755m. Both funds are also heavy on the largest technology stocks, allocating more than 20% of their assets to the sector.
Infrastructure funds took in £1bn over the year, with the FTF ClearBridge Global Infrastructure Income fund leading the way at £480m.
The strategy is run by Daniel Chu, Citywire A-rated Charles Hamieh, AA-rated Shane Hurst and AA-rated Nick Langley. It tops Citywire’s Infrastructure sector over one year in terms of total return, with a gain of 24.7% versus an average of 14.6%. Among its top holdings are National Grid and multinational pipeline company Enbridge.
As shown in the first chart, the Alternative Energy theme has also grown rapidly in recent years. It saw the third largest inflows in the last 12 months at £351m. The VT Gravis Clean Energy Income and Schroder Global Energy Transition mandates – the only two funds in the sector – drew in £168m and £183m respectively.
The most withdrawn theme, Technology, saw outflows concentrated in the T Rowe Price Global Technology Equity fund, which lost £240m. Run by Alan Tu, the fund ranks near the bottom of Citywire’s Technology sector over 12 months with a loss of 41.5% against 20.6% for the peer group.