Despite challenging market conditions, investor interest in thematic investing is rising, according to a research by BNP Paribas Asset Management (BNPP AM) and BNP Paribas Corporate & Institutional Banking (CIB), in collaboration with Coalition Greenwich, a data provider to the financial services industry.
The report, based on inputs from institutional investors and intermediaries across Europe, Asia, and North America highlighted a growing trend since 2020.
According to the report, 89% of respondents are familiar with thematic investing, with institutional investors showing a 10% increase in interest. However, intermediaries have seen a slight decline in usage. European investors lead the way, with thematic adoption rising from 46% to 61% since 2020.
Equities remain the preferred asset class for thematic strategies, but private markets are gaining traction, driven largely by institutional investors. Interest in private markets has grown by 11%, with global strategies dominating traditional asset classes, while private markets tend to favour regional approaches.
Sustainability remains a key focus, with 66% of investors prioritising positive impact and sustainable outcomes as their primary objective. Interest in renewable and clean energy has surged, with 60% of respondents favouring this theme for 2024, marking a 15% increase since 2020. Artificial Intelligence (AI) also remains a dominant innovation theme, with 74% selecting it as a top focus.
A journey of sustainable impact
Other key sustainability themes such as net zero, health and water remain stable, with water gaining more interest in Europe (rising from 29% to 38%). New themes like adaptation and resilience are emerging, the research found, reflecting their ties to broader ESG issues like climate risk.
Mobility, a growing global theme, has nearly doubled in interest from 6% in 2023 to 11% in 2024, particularly in North America, while diversity and equality themes see a decline, yet remain relevant in North America.
Private markets are becoming a key growth area for thematic investing, with nearly 60% of institutional investors planning to increase their allocations. While active equities still dominate, private markets are rapidly emerging as a significant area of focus.
Constance Chalchat, chief sustainability officer, BNP Paribas CIB and Global Markets, said: “The results demonstrate how investors continue to be increasingly interested in sustainability thematics. The ongoing thematic focus of investors on renewables and clean energy, alongside an evolving interest in resilience, water, adaptation, AI and demographics in this year’s survey, highlights the importance investors place on these issues.“
