Global thematic assets reached a three year high of $779 billion in Q3 2025, though still 15% below their 2021 peak, according to Morningstar’s data.
Europe accounted for 44% of global assets in the thematic funds market as of September 30, 2025, but its recovery has lagged. The region’s share has slipped below 50% for the first time in 10 years, following 10 straight quarters of outflows.
On the other hand, the Rest of World (RoW) category has expanded, driven by China’s strengthening role in the digital economy, technology and innovation-focused strategies.
US thematic assets rose 50% over the three years to the end of Q3 2025. Its global market share stood at 23%, according to the data, supported by the uptake of active ETFs.
In the US, thematic investing is mostly done through ETFs, while Europe continues to favour higher-fee active mutual funds. Chinese and RoW demand is driving digital-economy themes, while Europe leads in energy transition and broader thematic products. In the US, deglobalisation trends and the energy needs of AI are boosting flows into nuclear-themed funds, shared the data provider.
Across most regions, thematic funds continue to charge higher fees than non-thematic equivalents.
“Despite occasional bursts of strong performance, the long-term odds of picking a thematic fund that both survives and outperforms global equities remain low,” said Morningstar.
Thematic ETFs see steady growth
“Thematic investing is back in the spotlight, expanding at an unprecedented pace – both in size and scope. Security is the strongest momentum theme, lifted by rising geopolitical tensions, while AI & big data remain the era’s defining tech theme. Global thematic AuM hit a three-year high, with China and the US leading the rebound. Europe’s lagging recovery pushed its AuM share below 50% for the first time in a decade.
BlackRock holds a slight lead over Pictet, while China’s thematic boom has pushed several Chinese managers into the global top ten.
With $55bn in inflows this year and 82 new fund launches, asset managers remain bullish, yet the challenge of long-term outperformance persists. Investors are drawn to these funds for their focus on structural growth trends, but the proliferation of niche strategies emphasises the need for clarity and due diligence,” said Kenneth Lamont, principal for manager research at Morningstar.
