Investment plays an important role in
one’s life. It helps in securing your future. You may wonder why one must
invest. You might be trying to manage your budget and down payments. It may
feel that investing is a burden. Investments ensure an individual’s financial
security. Few strategies of investment are Thematic
Investing and smart beta
investment.
THEMATIC INVESTING
Thematic Investing looks at the economy as a whole (top-down investment). It makes
money out of opportunities created by various trends. Thematic investment
depends on various factors like technological and geopolitical trends. It
is not affected by geographic classifications. That includes the style or
market capitalization. Its design is based on how long-term investments will be
affected by trends. These trends can change existing business models. One can
refer Thematic Index provided by various firms. Indices can
provide a research approach and analysis. This can ease the process of
investment for investors.
SMART BETA INVESTING
Smart Beta Indices are a set of strategies and no single investment strategy. It focuses on
alternative index construction rules. It does not believe in traditional
market-capitalization based indices. Smart Beta Indices focus
on investment factors in market inefficiencies. They gain advantages of both
passive and active investing strategies. One can refer to smart beta
indices. They help in choosing an investment strategy according to goals.
COMPARISON BETWEEN SMART BETA AND
THEMATIC INVESTING
Both investment strategies have a few
things in common. For example, both gain profits by altering traditional
market-cap indices. Smart beta strategies tilt the return profiles of the
market cap index to a particular investment style. This results in growth. On
the other hand, the Thematic Index focuses on altering the
return profiles. It tilts the exposures to a particular concept or theme. This
analysis can help in choosing the strategy of investment. One can invest to
gain long term goals and returns.
