Beyond Conventional Investment: An Extensive Look Into Thematic Investment

Introduction

An asset essentially created with the intention of allowing money to grow in the future is investment. Investors may have plenty option to make investment with the objectives making more money in the future to meet needs and wants, shortages in income, saving for retirement, constructing houses, and other short-term requirements. Even though making investment is necessary for everyone, choosing the best one from the variety choices is very crucial too investor. Sometimes the selected one may not be able to give return according to the expectation, that may cause to the lot of challenges. So, the investor should have to study thoroughly before choosing and option and making the decision to invest according to the prevailing situation. An investor can expect return on their investment in two ways like profit received at the time of selling the investment and income by the way of accumulation of values if invested in a return generating plan. Investments can take the form of cash investments like stocks, bonds, etc., or fixed assets like buildings, machinery, or plants. Investments in any kind can help a business expand(Virlics, 2013). Individual investment decisions are affected by economic and behavioral factors and demographic factors (Patil & Bagodi, 2021). It is very complex to take investment decision by considering all the factors, so that to ensure an expected return and to reduce the risk investor can invest in group of assets like equities, bonds, currencies, cash and cash equivalents, and commodities. A set of financial assets owned by an investor is called investment portfolio. Moreover, it designates a collection of financial instruments that an investor employs to generate returns while guaranteeing the preservation of cash or assets. While fixing good investment portfolio investor has to considered and examine all the factors like Investment Objectives, Risk tolerance, Asset allocation, Diversification, Time horizon, Research and due diligence, cost and fees, Tax efficiency, etc.

The portfolio is used in financial investments to lower risk. The process of constructing an ideal financial investment portfolio was first presented by Markowitz (Fachrudin & Fachrudin, 2015). A new portfolio can be created with inclusion of various financial and non-financial assets. Each participant is suggested to have a personal quota in the portfolio, which is upheld for the duration of the project (Oliinyk & Kozmenko, 2019). In the paper the researcher intent to have an extensive discussion on thematic investment. So, it has to be analyzed both conventional and thematic based portfolio. To analyze the thematic investment research has considered the conventional type of investment. Investing in well-known assets (bonds, cash, real estate, and stock shares) with the hope of capital gains, dividends, and interest profits is referred to as traditional investing in the finance world (Shukla et al., 2023). Conventional investing places a strong emphasis on risk diversification and asset allocation across market sectors.

Numerous businesses have an impact on our lives through their goods and services, or their goals coincide with our own. We frequently hear predictions such as the future becoming electric cars or significant growth in the renewable energy sector. However, when it comes to investing, we could find it difficult to choose a stock within that industry to buy because there might be several companies that support our beliefs. For instance, you might be interested in sustainable energy but unsure of which business would be the best in that field. Themed investing can be a solution if you have encountered such a circumstance. Furthermore, investing in popular trends or identifying noteworthy possibilities without conducting in-depth stock research is known as thematic investing. Thematic investment is focusing on the concentrated approach on emerging trends. It focuses on the unique ideas, personal values and emerging and growing trends of the market. The focused investment on the emerging trends will help the investors to get return to the investors. People are following the theme-based project in all areas of business like, ESG (environmental, social and Governance), clean energy, crisis etc. This may give an opportunity to investors to invest in a specific theme-based business.