Thematic investments : bridging quantitative realities and behavioral fascinations
SONAR|HES-SO
- Allaz, Dimitri G.
- Seiler, Robert (Degree supervisor)
- Genève : Haute école de gestion de Genève
87 p.
Bachelor of Science HES-SO en Economie d’entreprise: Haute école de gestion de Genève, 2024
English
This bachelor thesis explore into the realm of thematic investments, examining their rapid growth, performance, and the behavioral aspects influencing investor decisions regarding them.
Using data from Morningstar, the study evaluates the quantitative performance of thematic ETFs through various metrics, including net inflows and outflows, the creation of thematic index, and the calculation of the investor return. Behavioral finance principles are integrated into the analysis to explore how cognitive biases—such as overconfidence, confirmation bias, and anchoring—affect investor behavior and market dynamics.
The research employs tools such as Google Trends and Google Ngram Viewer to track the popularity of different investment themes over time, linking these trends with investor activities and fund performance. Detailed case studies on themes like video gaming, cloud computing, and cannabis are included, illustrating how investor narratives and market trends drive the success or failure of these funds. The research also dive into the commercial aspects of thematic ETFs, examining how these funds are marketed and the consequences for investors. It is noted that thematic ETFs often carry higher fees due to their specialized nature, and their popularity is driven by compelling narratives and effective marketing strategies.
Key findings indicate that thematic investments often attract significant investor interest and capital; however, they frequently underperform due to the impact of behavioral biases and poor market timing. The analysis reveals that investors tend to enter these funds during periods of peak popularity, leading to suboptimal returns as the initial enthusiasm wanes. However, the study also highlights that investors do not necessarily perform worse than a buy-and-hold strategy applied to their respective ETFs.
The thesis recommends that investors and investment professionals adopt a balanced approach that combines an understanding of quantitative metrics with insights from behavioral finance. This approach can help mitigate the risks associated with thematic investments and enhance the potential for achieving sustainable long-term returns.
Using data from Morningstar, the study evaluates the quantitative performance of thematic ETFs through various metrics, including net inflows and outflows, the creation of thematic index, and the calculation of the investor return. Behavioral finance principles are integrated into the analysis to explore how cognitive biases—such as overconfidence, confirmation bias, and anchoring—affect investor behavior and market dynamics.
The research employs tools such as Google Trends and Google Ngram Viewer to track the popularity of different investment themes over time, linking these trends with investor activities and fund performance. Detailed case studies on themes like video gaming, cloud computing, and cannabis are included, illustrating how investor narratives and market trends drive the success or failure of these funds. The research also dive into the commercial aspects of thematic ETFs, examining how these funds are marketed and the consequences for investors. It is noted that thematic ETFs often carry higher fees due to their specialized nature, and their popularity is driven by compelling narratives and effective marketing strategies.
Key findings indicate that thematic investments often attract significant investor interest and capital; however, they frequently underperform due to the impact of behavioral biases and poor market timing. The analysis reveals that investors tend to enter these funds during periods of peak popularity, leading to suboptimal returns as the initial enthusiasm wanes. However, the study also highlights that investors do not necessarily perform worse than a buy-and-hold strategy applied to their respective ETFs.
The thesis recommends that investors and investment professionals adopt a balanced approach that combines an understanding of quantitative metrics with insights from behavioral finance. This approach can help mitigate the risks associated with thematic investments and enhance the potential for achieving sustainable long-term returns.
- Language
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- English
- Classification
- Economics
- Notes
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- Haute école de gestion Genève
- Economie d’entreprise
- hesso:hegge
- Persistent URL
- https://sonar.ch/global/documents/331391
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- ALLAZ DIMITRI-RENDU-SEPT.pdf: 514