Future trends: Investing in Xtrackers Thematic ETFs

Xtrackers | Update August 2022


Technologies of the future – Thematic investments

Xtrackers Thematic ETFs allow investors to participate in the trends of tomorrow. The ETFs track innovative indices that rely on innovative stock selection and weighting approaches supported by machine learning. In this way, investors can bring a new thematic investment approach to their portfolio.

 
 

Investing in future trends with Xtrackers Thematic ETFs

Modern Healthcare

Gene editing and genomic sequencing can enable better healthcare[1].

Fintech – Digital Solutions

Digital payments and contactless solutions disrupt the way we pay.

Internet & Technology

Investing in cloud computing[2], the Internet of Things (IoT)[3] and other technology trends on the Internet.

1. For example, genome sequencing is used in health research to study pathogen outbreaks and increasingly in personalized medicine for individual therapy decisions.

2. Cloud computing describes the on-demand availability of resources (especially in the form of data storage and computing power) without active management by the user.

3. The Internet of Things (IoT), describes the technology that facilitates communication between mobile devices and a cloud, as well as between the individual devices themselves.

Next Generation Innovations

Strong growth trend in thematic products reflects innovation potential in different industries.

Autonomous Driving / Electromobility

Future mobility: Innovations in the field of electrification and autonomous driving.

Artificial Intelligence / Big Data

Using artificial intelligence (AI)[1] to manage the "data flood" of a networked world and turn it into entrepreneurial success.

1. Artificial Intelligence (AI) is the ability of a computer or robot to absorb information and perform tasks through "intelligent learning" (e.g. Deep and Wide Learning).

 
 

Growth in Thematic Innovation

The range of thematic trend ETFs is growing rapidly, with MSCI – the world’s largest provider of financial indices – having launched many thematic indices to date. These include the MSCI Innovation Indices1, which offer exposure to some of the most important trends of our time.

Chart: Growing Thematic Fund Offering

Source: Bloomberg, as of July 2022

Speed of Innovation

Pioneering ideas in technology and research can enable exponential progress in many fields of everyday life. Over time, AI-based technologies and advanced processor chips are making our mobile devices faster and more powerful.

Moore’s Law, which was established in 1965, suggests that transistor count doubles approximately every two years, enabling faster computer processing[1]. This observation is relevant to other aspects of progress in computer technology such as the price of computers.

Chart: Computational Capacity of the Fastest Supercomputers

Number of floating-point operations (FLOPS[2]) carried out per second by the fastest supercomputer in any given year

Source: TOP500 Supercomputer Database, OurWorldInData.org/technological-progress
 
 

What does thematic investing mean?

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.

Why invest in thematic ETFs?

Thematic investments…

... make potential growth trends investable and allow investors to participate in them.

... could offer income profiles that are less affected by flattening growth rates and low-interest phases because they focus on long-term growth trends.

... are an attractive complement to traditionally oriented investments and could make a meaningful contribution to risk diversification.

... are based on a forward-looking investment approach that differs fundamentally from existing approaches.

... represent the invested theme in a comprehensive and transparent way.

How does Xtrackers thematic investing work?

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.

Exposure to China’s New Economy

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.

Facts About China

The weight of China in MSCI EM index increased from 18% at the end of 2009 to 32% at the end of 2021[3]

The Chinese government invests substantially in future fields such as AI research, where China overtook the US in 2020[4]

China’s public cloud services grew by almost 50% in 2020 vs 24% growth globally[5]

China‘s telehealth market is projected to overtake the US in 2023 and could become the largest globally[6]

 
 

Xtrackers Thematic-ETFs at a glance

Thematic Investing

Thematic Investing

Thematic Investing

Learn more about the future trends of today and how you can participate in them.

 
 

Expansion of Our Product Range

Thematic investing aims to identify the potential market leaders of tomorrow. Xtrackers Thematic ETFs allow investors to invest in innovative trends through intelligent index composition.

In July 2022, four new Thematic ETFs were added to the Xtrackers product range.

Future Trend: Modern Healthcare

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[7] allows gauging individual health predispositions more accurately; novel non-invasive tests increase chances of early detection of cancer, improving treatment perspective[8].

In the field of therapeutics, research is also being conducted into "living medicines" that use fully functional, modified cells to treat diseases[9]. 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[9].

Xtrackers MSCI Genomic Healthcare Innovation UCITS ETF

Investing in modern medical technology

Fund

MSCI Genomic Healthcare Innovation UCITS ETF

 ISIN
IE000KD0BZ68
 Fund currency
USD		 TER
0.35% p.a.		 Replication
direct		 Distribution
capitalizing

 

Xtrackers MSCI Genomic Healthcare Innovation ETF

Future Trend: Financial Technologies

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[10]. According to forecasts, digital wallets, i.e. mobile payment applications may account for over half of all e-commerce payments by 2024[11]. 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[12]and meet both thematic selection criteria and ESG screened criteria are included in the index[13].

Xtrackers MSCI Fintech Innovation UCITS ETF

Investing in the age of online payment

Fund

MSCI Fintech Innovation UCITS ETF

 ISIN
IE000YDOORK7
 FondsFund currency TER
0.35% p.a.		 Replication
direct		 Distribution
capitalizing

 

Xtrackers MSCI Fintech Innovation ETF

Future Trend: Next Generation Internet

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[14]
  • 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

Fund

MSCI Next Generation Internet Innovation UCITS ETF

 ISIN
IE000XOQ9TK4
 Fund currency
USD		 TER
0.35% p.a.		 Replication
direct		 Distribution
capitalizing

 

Xtrackers MSCI Next Generation Internet Innovation ETF

Future Trend: Innovation Investments

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

Fund

MSCI Innovation UCITS ETF

 ISIN
IE0006FFX5U1
 Fund currency
USD		 TER
0.35% p.a.		 Replication
direct		 Distribution
capitalizing

 

Zum Xtrackers MSCI Innovation ETF

Mobility in the future

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: Primary Sub-Themes

Chart Xtrackers Future Mobility UCITS ETF: Primary Sub-Themes

Xtrackers Future Mobility UCITS ETF

Investing in future mobility

Fund

Future Mobility UCITS ETF

 ISIN
IE00BGV5VR99
 Fund currency
USD		 TER
0.35% p.a.		 Replication
direct		 Distribution
capitalizing

 

Zum Xtrackers Future Mobility UCITS ETF

Artificial Intelligence and Big Data

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 AI & Big Data UCITS ETF: Primary Sub-Theme

Chart AI Sub Themes

Xtrackers Artificial Intelligence & Big Data UCITS ETF

Investing in artificial intelligence

Fund

Artificial Intelligence & Big Data UCITS ETF

 ISIN
IE00BGV5VN51
 Fund currency
USD		 TER
0.35% p.a.		 Replication
direct		 Distribution
capitalizing

 

Xtrackers Artificial Intelligence & Big Data UCITS ETF

 
 

Further information

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1. Source: Technological Progress - Our World in Data.

2. Unit of measurement used to calculate performance

3. Source: DWS International GmbH, MSCI Inc., as of December 2021

4. Source: Nikkei Asia, as of August 2021

5. Source: China Internet Watch as of December 2021

6. Source: UBS "Future of Humans" report, as of September 2020

7. Precision medicine (also called personalized medicine) is a medical model in which treatment methods, practices and/or medication are tailored to the individual patient and their predicted response or risk of disease.

8. msci.com

9. msci.com

10. Source: statista.com as of April 2022

11. Source: pwc-future-of-payments.pdf

12. MSCI ACWI IMI Fintech Innovation Index

13. Source: msci.com as of June 2022

14. Blockchains are best known for their role in cryptocurrency systems such as Bitcoin. The innovation of a blockchain is to ensure the security of a record and establish trust without the need for a trusted third party. For the avoidance of doubt neither Bitcoin nor any other cryptocurrency are part of the investable universe.

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