- One product covers 14 sub-themes
- Exposure to global megatrends in one place
- Strategy captures small growth companies
Global financial products firm WisdomTree has launched a new ETF (exchange-traded fund) which gives investors exposure to more than a dozen ‘megatrends’.
The fund, which will list on the London Stock Exchange on Tuesday 12 December, mirrors WisdomTree’s own Global Megatrends Index which is designed to track the performance of ‘companies involved in global megatrends including social, technological, environmental or geopolitical shifts’ with an ESG (environmental, social and governance) overlay.
MEGATRENDS NOT MEGABUCKS
Over the last five years, WisdomTree has launched multiple thematic ETFs so bringing lots of themes under one roof would seem a natural extension of its product range.
However, as global head of research Chris Gannatti admits, building a multi-thematic portfolio isn’t straightforward as there are plenty of pitfalls which could lead to the fund failing to fulfill the brief.
‘An overly-concentrated portfolio, a lack of control around the allocation between themes, a lack of focus on smaller, high-potential companies or a lack of discipline and theme expertise in stock selection can all diminish or even erase the impact of thematic investments’, cautions Gannatti.
WisdomTree claims its new ETF will give investors ‘exposure to the most important and transformative themes, benefit from short-term trends in thematics, maximise diversification between themes and growth potential, while minimising exposure to mega caps through a focus on pure play up-and coming companies’.
Among the 14 megatrends in the fund are technology themes including AI (Artificial Intelligence) and Big Data, blockchain, cloud computing, cybersecurity, digital infrastructure, health tech and semiconductors.
Demographics and sustainability are the other two pillars of the fund, including the aging population theme, emerging market consumers, the rise of the global middle class, sustainable food, sustainable energy production and storage and sustainable resource management.
The fund, WisdomTree Megatrends, will trade in dollars (WMGT) and sterling (WMGG) with a total expense ratio of 0.5%, and units are accumulating meaning dividends are reinvested.
