Investing in ‘thematic’ investment funds can be a good way to boost an ISA’s performance. By directing capital towards high-growth markets, this can potentially generate higher-than-average returns.
Here, I’m going to highlight three such funds that I believe are worth a closer look today. I think these products have the potential to turbocharge an ISA in the years ahead.
Schroder Global Healthcare
First up is the Schroder Global Healthcare fund. As its name suggests, this is focused on healthcare companies.
The reason I’m bullish here is that the healthcare industry looks set for strong growth in the decade ahead, thanks to the world’s ageing population. By 2030, around 1.4bn people globally will be aged 60 or over – 40% higher than in 2020. This should increase demand for healthcare services significantly.
Poor health associated with ageing is the next epidemic
Aetna International
This fund provides diversified exposure to the industry. Currently, it’s invested in nearly 70 different companies. Top holdings include the likes of medical instrument maker Thermo Fisher Scientific, diabetes specialist Eli Lilly, and UK-listed pharma giant AstraZeneca – all great businesses.
Long-term performance here has been very strong. Over the last five years, the fund has returned about 84% (versus 21% for the FTSE 100). Of course, past performance is not an indicator of future returns. However, all things considered, I think this fund has a lot of potential going forward.
- 1-year return: 9%
- 5-year return: 84%
Fidelity Global Technology
Next up, we have Fidelity Global Technology. This is focused specifically on tech companies.
Technology plays a major role in our lives these days. And looking ahead, it’s likely to play an even larger role as the world becomes more digital.
I see this fund is a good way to capitalise. It’s invested in around 100 different tech companies ranging from big players such as Apple and Alphabet to smaller players such as Salesforce and Qualcomm. So it provides diversified exposure to the industry.
Long-term performance here has been excellent. Over the last five years, the fund has returned about 133%. That said, it has experienced weakness at times due to the fact that tech shares are volatile.
I expect the fund to do well over the long run however, given the impact technology is having on the world today.
- 1-year return: 10%
- 5-year return: 133%
Sanlam Global Artificial Intelligence
Finally, we have the Sanlam Global Artificial Intelligence fund. This product – which is higher risk – is focused on companies that are active in the artificial intelligence (AI) space.
AI looks set to disrupt nearly every industry over the next decade. And it should create some lucrative investment opportunities in the process.
I think this fund is a great way to get exposure to the theme as it invests in companies using AI to their benefit. Top holdings include Alphabet, Microsoft, and Nvidia, which I see as three of the best AI stocks at present.
AI will permeate almost all areas of the global economy
Chris Ford, Sanlam Global Artificial Intelligence Fund Manager
Because of its niche focus, this fund can be volatile. Last year, for example, the fund produced double-digit losses.
Since its inception in 2017 however, it has done very well, returning about 17.5% per year (to the end of March).
I believe that in the long run, it will continue to outperform.
- 1-year return: 9%
- 5-year return: 91%
