Empowering your financial freedom

Learn more
Thematic investing

Thematic investing: What it is and how to get started? 

Just by hearing the word "investing", many think of highly-calculated strategies to earn a return. Strategies that require a lot of skill, knowledge, as well as time and are more about making the "right move" rather than putting your money where your beliefs are.

While this might have been the case when investing was in its early stages, reserved for those with deep pockets and experience in finance, things have drastically changed, especially now with crypto at the forefront.

Using crypto, anyone can make an investment, and by combining crypto with something called thematic investing, that investment can be aligned with a person's interests, values, beliefs, and emerging trends.

As thematic investing is not a term that is widely understood and used often, we will do our best to break it down for you in this article. 

So get excited and join us on this journey through the world of thematic investing!

What is thematic investing?

Thematic investing is a non-traditional investment strategy. A thematic is a bundle of assets grouped by a theme (hence the name thematic investing), which means investors no longer need to focus on individual assets but on choosing themes they believe in. 

The true beauty of thematic investing is that it removes the need to do extensive research before purchasing a thematic - a group of assets belonging to the same theme. By buying a thematic, you save time and effort, and in case you are a newbie, with thematics, investing becomes more accessible as the requirement to know what you should or shouldn't buy is no longer there.

In traditional finance, you can invest thematically using ETFs or stock indices which allow you to buy a group of stocks in a single transaction.

Let's take the S&P 500 as an example. 

The S&P 500, also known as the Standard & Poor's 500 Index, represents a market-capitalisation-weighted index of the top 500 publicly traded companies in the United States. Some consider it to be the best indicator of performance for the stock market as a whole, as it captures such a large part of it. So, anyone who wants to profit off the stock market doing well can just invest in the index. This way, they avoid spending time and effort that would otherwise be required to pick and invest in individual stocks.

In crypto, thematic investing is made possible thanks to crypto baskets/bundles. 

Similarly to how a stock index contains a group of stocks, a crypto basket/bundle contains a group of crypto assets and enables you to buy all of them in one go. Do bear in mind that this is just a comparison and that a stock index and a thematic are not the same.

So, for instance, a Metaverse crypto basket/bundle would be a group of the top Metaverse-related crypto assets. Anyone who has a strong belief that the Metaverse is something worth putting money behind could simply purchase the basket/bundle and skip the entire process of scouring the crypto market and buying assets one by one on two, three or even more exchanges, all with different prices and KYC guidelines.

These are just two very simple examples. There are many other thematics available in both traditional finance and crypto that will enable you to invest in a theme you believe will have success in the long-term such as sustainability , DeFi, gaming and so on.

What are the benefits of thematic investing?

Along with saved time and effort, thematic investing comes with other benefits which give it so much popularity.

Investing in the future 

While traditional investing is an approach that gives the most attention to "past best performers", thematic investing is an approach using which you can shape the world by investing in the future you want to see.

Enjoying diversification and lower risk

Thematic investing gives your portfolio the much-needed touch of diversification, as you are automatically investing in multiple assets instead of one asset at a time. Diversification means that your risk is spread across various assets, so if one asset has a big downfall, you won’t lose anything - it’s just one asset in your portfolio that is experiencing a loss.

Diversification is crucial if you want to reduce the risks your portfolio is exposed to. Investors holding just one or two stocks/crypto assets do not have this benefit.

Capitalising on potential growth

With thematic investing, you have the possibility to capitalise on the growth of a specific theme. So, if you decide to invest in a DeFi thematic and the DeFi industry grows as predicted, or even more, you reap the benefits. Plus, since investing in this thematic means investing in multiple DeFi projects/companies, the potential for you to capitalise on DeFi's growth is higher and not dependent on a single project/company. 

Having managed quality investments

If you are more conventional and prefer stock indexes or are a modern investor who wants to hold crypto baskets/bundles, the good news is that, in the majority of cases, the composition and asset allocation are carefully crafted based on proper research. 

Depending on where you purchase a thematic, you might also have the option to let expert tools or investors manage it.

How does thematic investing work?

Although thematics are made to simplify investing as much as possible, there are things that a holder of a thematic should be aware of to make the most of them.

Buying and selling in one tap

Once you buy a thematic, you will own a group of stocks, cryptos, or other assets, but you won't have to buy these assets individually. Instead, only one purchase is necessary. 

The same goes for selling a thematic; once you click/tap the sell button, everything within the thematic is sold instantly.

Picking the asset allocation 

Each asset in a thematic makes up a portion of the thematic. Most often, this portion is represented in percentages. 

If your thematic allows so, you might even be able to set these percentages yourself. This can be done according to your risk appetite or a certain asset allocation strategy.

Doing regular rebalancing

To generate an optimum return, maintain diversification, and distribute risk across assets, you will need to rebalance your thematic. 

Doing this is pretty simple. 

Imagine you have a thematic with two coins, BTC and PAXG , each making up 50% of the thematic. If the price of BTC goes up, causing it to make up 60% of the thematic, rebalancing should be done. In this case, rebalancing will involve selling some BTC and buying some PAXG.

If, on the other hand, the price of BTC goes down, causing it to make up 40% of the thematic, rebalancing should also be done, but in this case, you will buy some BTC and sell some PAXG.

By applying the rebalancing strategy, you are able to keep your thematic's original composition and asset allocation - 50% BTC and 50% PAXG.

Depending on the thematic you invest in, rebalancing may take place automatically (so the app, platform, or broker does it for you) or manually (you will need to manually buy and sell assets to maintain your target ratios).

How to start making thematic investments?

So you are ready to start investing in the future you want to see, according to your interests, values, and beliefs? Then it's time to find the perfect place to buy your first thematic!

That place could be the SwissBorg app, where you can buy, sell and swap our Thematics in seconds with our revolutionary Smart Engine.

All the thematics come with automated rebalancing and reallocation, allowing users to diversify their portfolio in a tap.

So, what are you waiting for? Start investing in what you believe in and stay tuned for all new Thematics that will be released in the future!

Disclaimer: The information contained in or provided from or through this article (the "Article") is not intended to be and does not constitute financial advice, trading advice, or any other type of advice, and should not be interpreted or understood as any form of promotion, recommendation, inducement, offer or invitation to (i) buy or sell any product, (ii) carry out transactions, or (iii) engage in any other legal transaction. This article should be considered as marketing material and not as the result of financial research/independent investments.

Neither SBorg SA nor its affiliates (“Entities”) make any representation or warranty or guarantee as to the completeness, accuracy, timeliness or suitability of any information contained within any part of the Article, nor to it being free from error. The Entities reserve the right to change any information contained in this Article without restriction or notice. The Entities do not accept any liability (whether in contract, tort or otherwise howsoever and whether or not they have been negligent) for any loss or damage (including, without limitation, loss of profit), which may arise directly or indirectly from use of or reliance on such information and/or from the Article.

Discover SwissBorg