Thematic Equities as a Diversification Tool for Stronger Portfolios

Pictet Asset Management’s thematic equities team outlines how strategies targeting secular growth trends can enhance diversification and risk-adjusted returns.

• The Global Megatrend Selection portfolio shows high active share versus MSCI ACWI, with one-third of holdings absent from the index, broadening diversification.

• Tilt toward smaller, niche firms offers exposure beyond megacaps, positioning portfolios for potential mean reversion as size and style factors rotate.

• Adding thematic baskets (e.g., clean energy, water, premium brands) to traditional equity-bond portfolios improved efficient frontiers in optimization tests.

Could thematic allocations provide a structural edge as market leadership shifts? Explore the full analysis for detailed insights.