Thematic Investing Isn't DIY— Leave It to the Professionals

Professional fund managers can decode complex macro themes and manage risks that retail investors often overlook

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Most investors typically seek to allocate capital to funds composed of stocks that are considered market darlings, owing to the substantial growth potential they offer. For instance, India is currently witnessing an uptick in the contribution of manufacturing to GDP, a trend driven by concerted government initiatives. This has, in turn, created significant earnings potential within the manufacturing sector.

Investors pursuing such a rationale are essentially engaging in 'thematic investing'—constructing portfolios around specific economic or structural themes. However, thematic investing is far from linear. It often encompasses multiple interrelated and ancillary sectors. To effectively capitalise on the manufacturing theme, for example, one must consider exposure not only to the core manufacturing firms but also to the companies involved in construction materials, construction equipment, steel production, and even new industrial ventures where the installed capacity is expanding.