Can any one explain elaborately on thematic investing

I was going through fires website and see thematic investment gives huge returns on comparison with mutual fund.

Can some one explain does this have same level of risk as it is in mutual funds.

Thematic investing belong to the investment style of top down approach. This means you have a larger picture (idea, fad etc) and you break it down to sector and company. Say you understand macro economic growth indicators and can reconcile back to a specific company. Or a secular trend .

Thematic investing can create can tremendous wealth but requires enormous knowledge as well. Often used by AMC as they have a barrage of people to dissect themes. From administration or process point of view AMC follows different process for thematic investing.

If we are comparing thematic investing to mutual fund it may not be right comparison. Because mutual fund itself is an investment vehicle not a particular style of investing. I assume you are asking difference between value investing and thematic investing. Then obviously the risk is much higher for thematic investing.

Themes are not necessarily profitable themes, because if it is profitable then promoters or incubators would have already made progress and no more a value buy. The excitement happens when you zeroed on a theme and put money in hope of success, Say investing in Airtel when they were selling Beetle phones only. Things can go terribly wrong, you can co-relate to venture capital style of investing.

Yes it’s incredibly risky, unknown territory (most even cant define a theme even they think they have found a new one), opaque information (even for some upcoming theme accounting takes time to align to business practice).

Again in realty most of new themes are in private space where you see action from Venture Capitalist or PE.