Most thematic Exchange Traded Funds (ETFs) look good on paper. Through a single trade on ASX, investors get exposure to dozens of companies benefiting from a hot megatrend.
Thematic ETFs are huge in the United States, less so here. Investors can choose from obesity ETFs, video-game ETFs, biblical ETFs, whiskey ETFs, marijuana ETFs and Millennials ETFs. Just about any group of global stocks can be turned into an index that can become an ETF.
There are about two dozen global or sector thematic ETFs on ASX. Thankfully, we have few of the exotic or niche thematic ETFs evident in the US or Europe. Most thematic ETFs on ASX are based on global sectors or themes that have low representation on ASX: large tech and pharmaceutical companies, for example.