Thematic Funds Landscape: The Latest Trends for Asset Managers

From artificial intelligence to demographic shifts, thematic funds offer a way to invest in big ideas shaping our future. For asset managers, understanding the nuances of this evolving landscape is critical for gaining a competitive advantage. 

Despite some recent turbulence, the market for thematic equity funds is showing renewed signs of life. This post will explore the latest thematic investing trends, using insights from the Morningstar Global Thematic Fund Landscape report. We will define what separates these funds from traditional sector funds, analyze asset growth and fund flow data, and introduce a powerful tool for benchmarking and analysis. 

This article is adapted from the recent report published by Morningstar Manager Research. The latest Morningstar Global Thematic Funds Landscape is available to download for free. 

A thematic investment fund is a mutual fund or exchange-traded fund (ETF) that selects its holdings based on exposure to one or more investment themes. These strategies aim to capture long-term structural growth trends that often transcend the traditional business cycle. Think of powerful, multi-decade shifts like technological advances, environmental changes, or evolving consumer behaviors. 

Unlike funds that focus on specific regions or company sizes, thematic funds build portfolios around compelling narratives. Thematic investing examples include funds targeting everything from robotics and cybersecurity to renewable energy and the future of healthcare. The core idea is to invest in companies poised to benefit from these transformative changes, regardless of their sector classification. This approach allows asset managers to offer products that align with investors' forward-looking investment goals. 

Thematic and sector funds can look similar at first glance, but their underlying growth narratives and the flexibility to invest across—or within a targeted subset of —sectors set thematic strategies apart. 

Sector investing typically targets established, well-defined industry groups such as technology, healthcare, or financials. Thematic funds, by contrast, can cut across sectors and geographies to capture an entire value chain linked to a long-term structural trend. For example, a battery-technology fund might invest in everything from lithium miners to electric-vehicle manufacturers, while a genomics fund may operate largely within the healthcare sector. 

To ensure clarity, Morningstar's taxonomy for thematic funds relies on stated intentionality. Funds that simply track standard sector or industry indexes are excluded. To cleanly separate these groups, we reference established frameworks like the Industry Classification Benchmark (ICB) and the Global Industry Classification Standard (GICS). 

For example, a broad technology fund is only included in our thematic universe if it explicitly targets a specific tech theme, such as "disruptive innovation" or "next-generation technology." This distinction is crucial for asset managers who need to perform accurate peer group analysis and benchmark their products effectively.

Despite a few lean years, asset managers appear confident in the future of thematic investing. After a period where fund closures were more common, the trend has reversed. In the first three quarters of 2025, 82 new thematic funds were launched. 

This represents a significant increase from the 36 new funds launched during the same period in 2024. The resurgence in product development suggests that firms see continued demand for long-term thematic ideas and are positioning themselves to capture future growth. 

A closer look at fund flows reveals a varied regional picture. While some markets are seeing a strong return of investor capital, others continue to struggle. 

European thematic funds have faced a more difficult environment. The region logged its tenth consecutive quarter of net outflows in the third quarter of 2025, with only three quarters of net inflows over the past four years. The physical-world strategies, particularly those focused on the energy transition, have been the hardest-hit segment. 

For asset managers, the ability to screen for investments, conduct peer analysis, and benchmark performance is essential. To support this, Morningstar introduced a revised Global Thematic Fund Taxonomy in November 2025. This classification system is built on stated intentionality rather than just holdings, providing a more accurate view of the thematic landscape. 

Each thematic fund receives three progressively granular labels: Broad Theme, Theme, and Subtheme. The recent update focused on streamlining the subthemes to create larger, more analytically meaningful peer groups. Each subtheme now has a written definition to improve clarity and comparability. 

Asset managers can leverage this powerful taxonomy within Morningstar Direct to filter the universe of thematic funds, analyze competitors, and identify opportunities. This data-driven approach helps you compare funds on an apples-to-apples basis, giving you the insights needed to build and position your products for success.