What is the appeal of thematic investing?
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At Schroders, we believe that the purpose of a thematic fund is to invest in powerful investment themes where human ingenuity ignites innovation to address imbalances in the world.
Thematic funds focus on powerful, long-term global trends which are transforming the world and creating a wealth of investment opportunities.

These imbalances could be between populations and resources such as climate change, a response to which is the energy transition theme. They could also be between supply and demand in individual industries where there is unmet demand or inefficient supply, the response to which is the disruption theme as innovators challenge the status quo.

These types of imbalances are often linked. The theme of healthcare innovation, for example, is a response to demographic imbalances as well as to supply inefficiencies within the healthcare industry itself.

Thematic funds, in our view, should therefore invest in those companies with the ingenuity to innovate and help address these imbalances.
How do you identify a theme?
Firstly, we consider whether the theme is driven by human ingenuity igniting innovation to address imbalances in the world. When we have identified potential themes, we then assess them using a number of criteria:
1.

It is critical that they have longevity and so they need to be structural in nature rather than cyclical or short-lived fashions.

In this respect, it is often very useful to look at what we call the ‘history of the future’ because many of the most powerful future themes are those which have driven innovations in the past. Indeed, since ancient times, human ingenuity has helped to transform the world and the way we live and work with innovations in areas like manufacturing, consumer behaviour, healthcare and entertainment.
2.

The themes also need to have valuation upside because we are investing in shares rather than in themes in the abstract.
3.

Finally, the themes we choose must also have a pool of stocks to select from that is neither too narrow nor too broad. If they are too narrow, they deny the portfolio manager the flexibility to chart their way through evolving themes. If they are too broad, they lack the precision which clients seek when they invest in a particular theme.
At Schroders, our Data Insights Unit of data scientists is critical in helping us build these investment universes. The team is invaluable in bringing to our attention fascinating companies exposed to our favoured themes which have not yet been fully recognised by the market.

In terms of popularity, themes which have particular resonance for us include climate change, urbanisation, disruption, energy transition, healthcare innovation, manufacturing innovation and changing lifestyles.
Why is thematic investing growing in popularity?
Thematic investing is increasingly attractive because it provides active long-term exposure to powerful and persistent themes that are transforming our planet and daily lives. This type of investing allows clients to invest with precision in trends which are important to them. Indeed, as clients’ intellectual and emotional connections to themes have strengthened, thematic funds are increasingly becoming a part of investors’ thinking.

Through such funds, investors can gain exposure to those less well-known undervalued companies within long-term themes whose growth prospects are not yet recognised in their share prices.

Alongside this search for investment return, many thematic funds offer exposure to a number of themes with sustainability at their heart. Themes such as climate change, energy transition and healthcare innovation play a part in this respect. In any theme, it is imperative that companies have a sustainability mind set if they are to prosper in the long run.

As powerful as these themes are though, they do not operate in a vacuum. The returns made by thematic investments can be influenced by other variables such as the wider economic environment and the waxing and waning of particular investment styles within markets.
Disclaimer
This article has been prepared by Affin Hwang Asset Management Berhad (hereinafter referred to as “Affin Hwang AM”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to Affin Hwang AM and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of Affin Hwang AM. The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, Affin Hwang AM makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions. As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product. Affin Hwang AM is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers. Affin Hwang AM and its affiliates may act as a principal and agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities. Neither Affin Hwang AM nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (expressed or implied) arising out of, contained in or derived from or any omission from this presentation, except liability under statute that cannot be excluded.

WARNING STATEMENT
A copy of the Prospectus and Product Highlights Sheet ("PHS") can be obtained at Affin Hwang Asset Management Berhad's sales offices or at www.affinhwangam.com. Investors are advised to read and understand the contents of Affin Hwang Aiiman Global Multi Thematic Fund’s (or the “Fund”) Prospectus dated 12th August 2021 and corresponding PHS before investing. There are fees and charges involved when investing in the Fund. Investors are advised to consider and compare the fees and charges as well as the risks carefully before investing. Investors should make their own assessment of the risks involved in investing and should seek professional advice, where necessary. The price of units and distribution payable, if any, may go down as well as up and the past performance of the Fund should not be taken as indicative of its future performance. The Securities Commission Malaysia has not reviewed this marketing/promotional material and takes no responsibilities for the contents of this marketing/promotional material and expressly disclaims all liability, however arising from this marketing/promotional material.

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TENG CHEE WAI

Managing Director
Teng Chee Wai is the founder of Affin Hwang Asset Management Berhad (Affin Hwang AM). Over the past decade, he has built the Company to be the fastest growing and only independent investment management house in Malaysia’s top three, with an excess of RM47 billion in assets under management as at 31 December 2018.​

​In his capacity as Managing Director / Executive Director, Teng manages the overall business and strategic direction as well as the management of the investment team. His hands-on approach sees him actively involved in investments, product development and marketing. Teng’s critical leadership and regular participation in reviewing and assessing strategies and performance has been pivotal in allowing the Company to successfully navigate the economically turbulent decade.

Teng’s investment management experience spans more than 20 years, and his key area of expertise is in managing absolute return mandates for insurance assets and investment-linked funds in both Singapore and Malaysia. Prior to his current appointments, he was the Assistant General Manager (Investment) of Overseas Assurance Corporation (OAC) and was responsible for the investment function of the Group Overseas Assurance Corporation Ltd.​

​Teng began his career in the financial industry as an Investment Manager with NTUC Income, Singapore. He is a Bachelor of Science graduate from the National University of Singapore and has a Post-Graduate Diploma in Actuarial Studies from City University in London.
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