EXCLUSIVE: Tema ETFs' Innovative Thematic Investing Approach Targets New Opportunities Beyond The Fads

Author: Piero Cingari | December 01, 2023 12:14pm

Tema ETFs is redefining thematic investing by prioritizing long-term structural trends and precision in security selection, diverging from the industry norm of chasing short-lived market fads.

This innovative approach was the focal point of a virtual session hosted by Benzinga’s “ETFs Unlocked,” moderated by Benzinga’s Aaron Bry.

Yuri Khodjamirian, CFA, chief investment officer at Tema ETFs, revealed the company’s innovative approach to thematic investing, addressing common pitfalls in passive funds and showcasing their latest offerings in various market themes including product reshoring in the U.S., luxury goods, and cardio-metabolic diseases.

Tema ETFs: Pioneering Precision in Thematic Investing

Established two years ago with six funds in the market, Tema ETFs has carved a niche in the ETF landscape.

“We want to be in structural long term growing areas of the market where we really believe there’s an investment merit over multiple decades,” Khodjamirian said.

Emphasizing long-term structural themes, they use expert analysis for security selection, ensuring portfolios are precisely focused on high-quality companies benefiting from these structural trends.

Addressing Core Issues in Thematic Investing

Tema’s mission is to solve key problems in thematic investing. Traditional passive thematic investing often gravitates towards transient market fads, lacking investment longevity.

Tema, conversely, chooses themes with multi-decade investment merits, steering clear of the hype cycle.

Precision in security selection is another area where Tema stands out.

Khodjamirian highlighted the industry’s challenge in aligning themes with appropriate stocks, citing the overrepresentation of companies like Microsoft Corp. (NASDAQ:MSFT) and NVIDIA Corp. (NASDAQ:MSFT) in numerous unrelated ETFs. Tema addresses this through meticulous expert-led stock selection, ensuring themes and securities align perfectly.

Quality is also paramount at Tema. Rather than compromising on company quality to fit a theme, Tema’s approach is to handpick quality businesses, steering clear of poor capital allocators or unprofitable ventures.

Spotlight on Key ETFs: American Reshoring, Cardiovascular Diseases, and Luxury Goods

The discussion then turned to specific ETFs offered by Tema, highlighting their unique strategies:

Tema American Reshoring ETF (NYSE:RSHO): Focused on companies benefiting from the reshoring of manufacturing to the U.S., this ETF capitalizes on private sector moves to localize supply chains and massive government initiatives like the Inflation Reduction Act. “This trend is accelerated by about $1.8 trillion in government spending,” Khodjamirian noted.
Tema Cardiovascular and Metabolic Diseases ETF (NASDAQ:HRTS): Managed by a seasoned expert with over 25 years of experience, HRTS targets companies innovating in the treatment of cardiometabolic diseases, a sector responsible for a third of global deaths.
Tema Luxury ETF (NYSE:LUX): LUX seeks companies embodying true luxury, avoiding the trap of including mass consumer brands. It aims to capture the high return potential of luxury brands that cater to an increasingly wealthy global population.