Future trends: Investing in Xtrackers Thematic ETFs

With thematic investments, investors don’t focus on traditional sectors and companies, but on growth themes of the future. These are, for example, companies that make ground-breaking technologies the core of their business model. Such companies often have the opportunity to make existing business models or markets obsolete and create new ones.

Xtrackers Thematic ETFs offer the opportunity to invest in megatrends that have the potential to revolutionise our lives and our environment through AI-based selection. They invest in leading companies involved in future themes, such as digitalisation or alternative driving technologies. Stock selection is not based on traditional methods, for example the weighting of countries and sectors, as is the case with conventional indices. Thematic indices consist of companies that are well positioned to benefit from long-term macroeconomic or structural trends across sectors and countries. This investment trend is growing in popularity, so the range of themes that are becoming investable through such approaches is expanding.

Thematic indices enable a completely new way of investing. They combine a data-based, dynamic approach to security selection with passive, index-based investments.

Xtrackers thematic indices use a multi-stage process to identify companies that play an important role in future themes. From a broad investment universe, an initial screen selects equities that meet tradability and size requirements. Following this, remaining companies are evaluated based on their contribution to the theme. A company's contribution is based on current sales in the industries relevant to the theme as well as a company's research activity, which is analysed and segmented by using artificial intelligence (AI).

In this way, the thematic approach offers a high degree of flexibility, so even a rapidly developing trend is not overlooked, but remains investable in all its facets.

China’s role in the global economy and in major equity indices is growing in prominence. It is fast becoming a technology-driven economy and playing a crucial role in new dynamic sectors such as Internet, Mobility, Industrials and Healthcare.

Global demand for electricity continues to rise, driven by electric vehicles (EV), ongoing digitalisation, industrial electrification and AI applications.^[7] This growth places greater demands on grids, storage and control systems to integrate new loads, requiring continued investment in transmission, distribution and system technologies.

Electrification is also gaining greater strategic relevance around the world, shaped by factors including energy security, cost efficiency and industrial competitiveness. In Asia, this momentum is particularly pronounced, reflecting growing industrial hubs, the rise of renewable energy and the need for modern infrastructure.^[8]

As modern energy systems become more complex, smart grids –intelligent electricity distribution networks – are increasingly important for generating, controlling and transmitting power more efficiently. 

The thematic “Electrification & Smart Grid” index can help investors to target the growth emerging from these developments.

Xtrackers Electrification Technologies & Smart Grid UCITS ETF

Xtrackers Electrification Technologies & Smart Grid UCITS ETF

Risks:

• The fund is not capital protected. The value of an investment may fall as well as rise. Past performance is not a reliable indicator of future performance.
• The fund is subject to currency risk. Foreign exchange markets can be highly volatile. Significant fluctuations may occur in currency markets over short periods of time and may result in losses in relation to an investment.
• The value of an equity investment depends on a variety of factors, including market conditions, the prevailing economic environment, industry trends, geographic region and political events.
• The fund concentrates on a single or a limited number of economic sector(s), industry/industries or types of companies, and its performance may not reflect the price development of broader markets.
• The fund follows a rules‑based strategy that may deviate from overall market developments or the broader index. The investment may be less diversified, and there is no guarantee that the index’s rules‑based strategy will be successfully achieved.

Innovations in modern healthcare are focused on gene editing and genomic sequencing which could enable better healthcare. The Xtrackers MSCI Genomic Healthcare Innovation UCITS ETF includes companies involved in molecular diagnostics, agricultural biotechnology and bioinformatics, among others. For example in diagnostics, precision medicine^[9] allows gauging individual health predispositions more accurately; novel non-invasive tests increase chances of early detection of cancer, improving treatment perspective^[10].

In the field of therapeutics, research is also being conducted into "living medicines" that use fully functional, modified cells to treat diseases^[11]. Aggregation of health data via personal networked or medical devices can thus contribute to better monitoring of patients and provide efficiency gains for R&D processes^[11].

Xtrackers MSCI Genomic Healthcare Innovation UCITS ETF - Investing in modern medical technology

Xtrackers MSCI Genomic Healthcare Innovation ETF

Digital payments and contactless solutions have grown in popularity; the number of active Paypal accounts alone has risen by 68% within three years and reached almost 430 million by the end of 2021^[12]. According to forecasts, digital wallets, i.e. mobile payment applications may account for over half of all e-commerce payments by 2024^[13]. But digital offers in stationary trade, such as paying at the checkout with a mobile phone or smartwatch, are also being used more and more frequently and could offer investors new future-oriented investment opportunities.

Digital solutions are changing the way we pay - so the Xtrackers MSCI Fintech Innovation UCITS ETF aims to reflect the performance of equities of large, medium and small-capitalisation companies worldwide that generate significant revenues from technological innovations in the financial sector. Only companies that are part of the parent index^[14]and meet both thematic selection criteria and ESG screened criteria are included in the index^[15].

Xtrackers MSCI Fintech Innovation UCITS ETF - Investing in the age of online payment

Xtrackers MSCI Fintech Innovation ETF

The underlying MSCI ACWI IMI Next Generation Internet Innovation Index comprises of large, medium and small capitalisation companies from 23 developed and 24 emerging markets with a focus on the following areas:

• Cloud Computing - Provision of computer services over the internet, the so-called "cloud"
• IoT - The Internet of Things enables digital devices to communicate across different types of networks
• Mobile & Digital Payments - Contactless payment options and innovative financial technologies
• Blockchain & P2P - Databases to store information electronically in digital format^[16]
• Machine Learning & AI - The ability of a computer system to imitate human cognitive functions such as learning or problem solving

Xtrackers MSCI Next Generation Internet Innovation UCITS ETF - Investing in the future of internet

Xtrackers MSCI Next Generation Internet Innovation ETF

Xtrackers Thematic ETFs enable investors to invest in the growth potential of innovative sectors that could have a significant impact on the economy. The new Xtrackers MSCI Innovation UCITS ETF includes stocks with the following thematic focuses:

• Genomic Innovation - Advanced healthcare and medical technologies
• Fintech Innovation - Contactless payment options in digital commerce and stationary trade
• Next Gen Internet - From cloud computing and IoT (Internet of Things) to blockchain and peer-to-peer networks
• Autonomous & Industrial Tech Innovation - Robotics and automation technology as innovations in industry

Xtrackers MSCI Innovation UCITS ETF - Investing in pioneering ideas

Zum Xtrackers MSCI Innovation ETF

How will we get around in the future? Few future topics have received more attention in recent years, not only from investors. While the race for the best technologies has only just started, two clear trends are emerging in the field of mobility: electric and autonomous driving.

The thematic Xtrackers Future Mobility UCITS ETF integrates these developments into one investment approach by covering up to six sub-themes that are crucial for the future of electric and autonomous mobility.

Xtrackers Future Mobility UCITS ETF - Investing in future mobility

Zum Xtrackers Future Mobility UCITS ETF

These days, we are surrounded by “Big Data”. In order to handle the “flood” of data, and to convert it into entrepreneurial success, powerful and intelligent hardware and software solutions are needed.

The thematic index “Nasdaq Yewno Global Artificial Intelligence and Big Data Index” offers exposure to up to seven most important sub-themes of growth emerging from this market.

Xtrackers Artificial Intelligence & Big Data UCITS ETF - Investing in artificial intelligence

Xtrackers Artificial Intelligence & Big Data UCITS ETF