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One of the traditional barriers to thematic investing has been the additional cost associated with hand-picking stocks on an active-management basis, but this is changing. As datasets improve, and as companies disclose more data, asset managers have the freedom to develop solutions to bridge the gap between active investing and indexing approaches.
Lead strategist on thematics for iShares by BlackRock Omar Moufti highlights that while iShares' thematic range does not hand-pick specific stocks to invest in, systematic methodologies have been developed to find companies that are exposed to given themes. He explains that end exposures are very similar to active funds despite blending features associated with indexing.
He says: "In recent years, there's been an explosion of available data. We can now mimic the active approach and create these universes using these datasets to find the companies that are linked to each theme. And then we put them together in a diversified portfolio as an active manager would do."
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