In pursuit of value creation, our sustainable theme investment professionals focus on companies whose products and services, in their view, stand to make positive long-term contributions to society and the environment, underpinned by structural economic drivers.
Our approach: Focusing on trendlines, not headlines
For more than 40 years, Wellington investors have engaged in a firmwide research initiative, aimed at identifying the ideas that will shape the future. This culture of thematic thinking is the basis of and inspiration behind our next-generation investment approaches.
Structural themes can change the world. Areas like biotechnology or renewable energy, which were barely investable 30 years ago, are now enormous opportunity sets. Today’s next-generation ideas may be among the most important long-term economic drivers for the next 30 years.
The dynamics that sustain economic progress are typically more enduring than near-term growth drivers, and these structural trends can provide a wide range of investment opportunities.
Our sustainable theme investment professionals believe an active approach to thematic investing is essential for identifying disruptive companies that can improve outcomes through scale, cooperation, and innovation. Our portfolio construction focuses on risk contributions, aiming to smooth risk and return experiences across thematic exposures.
How to invest
Thematic emerging markets equity fund focused on sustainable economic development themes
Art.8 (SFDR)
Capital at risk
What route is right in emerging markets investing?
How can investors find the most compelling opportunities within emerging market equities? Simon Henry and Dáire Dunne explain why they think targeting the economic development opportunity may provide a roadmap for success.
Meet our sustainable theme investing experts
Dáire Dunne
, CFA
Simon Henry
, CFA
Natasha Brook-Walters
Insights
US election special: which investment themes win at the polls?
The upcoming US election could be one of the most momentous in recent history. How could the result affect different investment themes? Our thematic team investigate the potential implications for investors.
Thematic investing focus: how exactly will AI transform the world?
We are on the brink of a technological revolution that has major implications for all sectors, companies, labour, and regulators. How can a thematic lens help investors separate hype from reality?
Beyond the hype: finding AI’s long-term winners
Our expert argues that a long-term mindset based on deep research can help to uncover evolving AI investment opportunities amid the hype.
Three ways social considerations can enhance portfolios
Four leading Wellington equity and fixed income experts explore three ways social considerations can enhance portfolios.
Thematic investing focus: advancing the next generation of energy
The decarbonisation process represents the biggest capital cycle in our lifetime. As we develop the next generation of energy, Keith White, Daouii Abouchere and Megan Galligan examine how thematic investors can make the most of this structural opportunity.
Thematic investing focus: evolving the current generation of energy
The energy transition is taking place amid a greater focus on energy security and affordability. What could this mean for the role of traditional energy companies, ask Keith White Daouii Abouchere and Megan Galligan.
Thematic investing: Long-term thinking for a short-term world
With economic conditions expected to remain volatile in the coming year, members of our Investment Strategy team suggest that thematic allocations may help reduce the importance of the cycle to portfolio returns.
URL References
Related Insights
FAQs: Sustainable theme investing
This form of investing enables investors to gain exposure to both megatrends — structural shifts that are reshaping our economy and way of life, and themes — groups of securities with similar properties that support or benefit from those megatrends. These stocks, which often span traditional sector classifications, may offer investors a differentiated way to diversify their equity allocations. Finally, while sustainable themes are relevant for both developed and emerging markets, we believe the economic development opportunities in emerging markets today have the potential to provide substantial tailwinds for these stocks. The risks to sustainable thematic investing include macro and market volatility, and uneven progress toward economic development goals.
There is a great deal of thematic overlap between impact and sustainable theme investing, as both focus on generating competitive investment returns alongside positive social and economic outcomes. Impact investors, however, have specific investment thresholds of materiality (a certain percentage of an investee’s revenue must be generated from impact activities), additionality (the investee’s impact must have a low probability of being addressed by other means), and measurability (a theory of change must be clear and an investee’s progress toward impact must be quantifiable).
The sustainable thematic investment universe is characterized by disruption and dispersion. Many companies are disrupting sectors, industries, and business models. This creates significant dispersion among potential long-term “winners” and “losers,” which, in turn, results in alpha opportunities for active managers. We believe that fundamental, bottom-up research coupled with deep understanding of the macro and geopolitical environment strengthens the investment case for this approach.
Explore other sustainable and ESG investing opportunities
Seeks to invest in issuers that we believe contribute to a lower-carbon future, can help the world adapt to a changing climate, or are well positioned to manage transition and/or physical risks
Seeks to invest in issuers whose core products, services, or projects provide environmental and/or social solutions in a differentiated way, with the goal of driving measurable positive impact alongside financial returns
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