Thematic Investing

Axel Lomholt, Chief Product Officer for Indices & Benchmarks at Qontigo, explains how technology and data innovation are buoying thematic investing, and what it takes to be at the research frontline in thematic strategies.

Stocks rose in March, rebounding from losses in the month’s first half, as investors raised expectations the Federal Reserve may soon pause its interest rate hikes following the collapse of three lenders in the US.

Citigroup has expanded its suite of thematic structured products linked to STOXX indices that are adapted for participation products.

A panel at the annual conference organized by the derivatives exchange, held last week, discussed the drivers behind the boom in thematic investing. As thematic ETFs continue to lure inflows, demand will also move on to listed derivatives, the experts said.

Two panels at the SRP Europe Conference 2023 discussed the role of index design in building structured products for a changing market landscape. Topics covered include rising interest rates and volatility, and growing demand for sustainability and thematic investment strategies.

US and Asian stocks fell in February, as better-than-expected economic reports in the US signaled the Federal Reserve has room to continue raising interest rates. European shares climbed when measured in euros.

Using Axioma’s Macroeconomic Projection Model, we decompose the risk factors that drove returns in the STOXX Global Broad Infrastructure between 2020 and 2022. The results show the index had a positive exposure to the risk model’s inflation factors, meaning it stood to benefit from rising global inflation expectations.

Stocks jumped in January as expectations built up that inflation worldwide may have peaked and that any recession in key developed economies may be mild.

The recently launched STOXX Global Metaverse Index uses a sophisticated methodology to screen those companies with the most relevant patents in technologies associated with the Metaverse. This allows investors to target innovators whose products and services are likely to be leading the transition to the virtual world in the coming years. A new Qontigo whitepaper explores the index in detail.

In this paper, we explore the rationale and methodology behind the construction of the index. We start by explaining the concept of megatrends and how they can be captured through thematic indexing, using a multifaceted approach. We look as well at the index performance before concluding with an outlook on the opportunities for the Metaverse in the years to come.

Stocks declined in December, wrapping the STOXX® Global 1800 index’s worst year since 2008, as investor concerns lingered about the impact of inflation and higher interest rates on economic and earnings growth.