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Thematic Indices

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Dwijen Gandhi
Senior Director, Equity Index Research and Development
Capturing megatrends via thematic investing

Thematic investing is booming. As investors watch ‘megatrends’ flourish - rapid urbanization, electric cars, sustainability - they have increased allocations to funds that allow them to gain exposure to these growing macroeconomic patterns.

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The world is ever-changing. Innovations and breakthroughs in technology, health care, consumer lifestyles and sustainability are transforming people’s lives and spending habits, and consequently, entire industries and world economies. The underlying macro trends that are leading to this rapid evolution are known as “megatrends”.

Examples of megatrends include technological transformation in the areas of artificial intelligence, robotics, and autonomous driving, as well as growing interest in sustainability as the world grapples with the threat of climate change.

Unlike a traditional sector index that targets health care or biotechnology companies, a thematic index must often capture companies across multiple sectors. As an example, an index like the NYSE FactSet U.S. Infrastructure Index (NYFSINF) that targets the revitalization of and reinvestment in U.S. infrastructure includes companies that produce the materials (basic materials companies), perform the construction (industrial companies), and own the actual assets (utility companies). As a result, two different thematic indices that aim to represent the same theme can result in quite different index compositions and outcomes.

It is important that an index provider clearly defines the underlying megatrend, and compiles a rules-based, transparent method of identifying and selecting companies with a defined exposure to that theme. The intended end goal is for such an index to include companies that are the most representative of the underlying megatrend. As the megatrend grows and becomes more powerful, the basic premise and aim is that the companies exposed to it will also benefit. ICE Thematic Indices provide multi-asset class exposure to a range of megatrends. We also offer index customization options by working with clients to first help define a megatrend and then compile a methodology and backtest to represent that in index form.

Specific Megatrends & Related ICE Thematic Indices

Additional indices covering these themes can be found in the table below.

Megatrend
Related Indices
Rising Demand for Semiconductors
Advancement of technologies ranging from mobile phones to autonomous driving have highlighted the importance of semiconductors (chips) and the companies that manufacture them.
ICE Semiconductor Index (ICESEMI)
ICE FactSet Taiwan ESG Leading Semiconductor Index (ICEFSTL)
Dynamic Semiconductor Intellidex Index (DZE)
Health Care Innovation
Health care innovation resulting from advances in biotechnology, genomics, immunology, and more recently, the response to COVID-19.
ICE Biotechnology Index (ICEBIO)
NYSE FactSet Global Genomics and Immuno Biopharma Index (NYFSGIB)
NYSE Arca Biotechnology Index (BTK)
Consumer Lifestyle Shifts
Consumer lifestyle changes resulting from the growth of the internet and online communities, and remote work during the pandemic.
NYSE FactSet Global Virtual Work and Life Index (NYFSVWL)
Dynamic Leisure & Entertainment Intellidex Index (DZL)
Dynamic Media Intellidex Index (DZM)
Focus on Sustainability
Increasing interest in sustainability driven by climate change is changing government policies, economies, businesses and how we choose to allocate our investments.
ICE Corporate Bond ESG Indices
ICE Global Government Carbon Reduction Indices
ICE Carbon Futures Index Family
Technological Transformation
Exponential growth and advancements across different technologies ranging from cybersecurity, robotics, artificial intelligence, software, and the cloud are quickly transforming people’s lives.
NYSE FANG+ Index (NYFANG)
ICE Asia Tech 30 Index (ICEAT30)
NYSE Technology Index (NYTECH)
Transformation of Travel & Mobility
In a post-COVID world, airlines are adapting to the new normal, while consumers on the ground are choosing to travel in a more sustainable and technologically advanced way.
NYSE FactSet Global Autonomous Driving and Electric Vehicle Index (NYFSAEV)
ICE FactSet Global Autonomous and Electric Vehicles Index (ICFSAEV)
NYSE Arca Global Airline Index (AXGAL)
Reinvestment in U.S. Infrastructure
The revitalization of U.S. infrastructure is now back into focus as a bipartisan issue due to natural disasters and aging bridges, roads, and tunnels.
NYSE FactSet U.S. Infrastructure Index (NYFSINF)
Dynamic Building & Construction Intellidex Index (DWC)
NYSE Arca Steel Index (STEEL)
5G & Future of Communication
The 5G revolution is here - and in focus are not only the companies that help build it, but also the industries that will use and benefit from it.
ICE FactSet Global NextGen Communications Index (ICEFSNC)
Dynamic Networking Intellidex Index (DZN)
NYSE Arca North American Telecommunications Index (XTC)
Geopolitics
Brexit, the Middle East, U.S. / China relations, trade - these are just several of the active topics in today’s geopolitical landscape.
NYSE Arca Hong Kong 30 Index (HKX)
NYSE Arca China Index (CZH)
NYSE Arca Japan Index (JPN)
Inflation
Economists are paying close attention to measures of inflation after years of quantitative easing and loose monetary policies.
NYSE Arca Gold Miners Index (GDM)
NYSE Arca Gold BUGS Index (HUI)
NYSE Arca Junior Gold BUGS Index (JHUI)
Resource Scarcity
Oil, rare earth minerals, lithium are just a few examples of the natural resources that are in focus and highly sought after by countries.
StrataQuant Global Commodity Index (STRQGC)
NYSE American Composite - Natural Resources Subsector Index (XNA)

Additional ICE Thematic Indices

Click to expand
Rising Demand for Semiconductors
ICE FactSet Asia Semiconductor Index (TWD PR) (ICEFSAS)
ICE FactSet Taiwan Core Semiconductor Index (ICEFSTS)
ICE FactSet Global ESG Foundry Leader PLUS Network Index (ICFSFLN)
Health Care Innovation
NYSE Arca Pharmaceutical Index (DRG)
Dynamic Biotech & Genome Intellidex Index (DZO)
Dynamic Pharmaceutical Intellidex Index (DZR)
NYSE Arca Equal Weighted Pharmaceutical Index (DGE)
Dynamic Healthcare Services Intellidex Index (DHC)
Consumer Lifestyle Shifts
Dynamic Food & Beverage Intellidex Index (DZF)
Dynamic Retail Intellidex Index (DWR)
NYSE Arca Tobacco Index (TOB)
Focus on Sustainability
ICE BofA Green Bond Index
NYSE Arca Environmental Services Index (AXENV)
ICE Taiwan ESG Sustainability High Dividend Select Top 30 Index (TWSHD30)
Technological Transformation
NYSE TAB+ Index (NYTAB)
NYSE FactSet Global Robotics and Artificial Intelligence Index (NYFSRAI)
NYSE FactSet U.S. Tech Breakthrough Index (NYFSUTB)
NYSE FactSet Global Cyber Security Index (NYFSSEC)
NYSE Arca Tech 100 Index (PSE)
Dynamic Software Intellidex Index (DZC)
NYSE Arca Computer Technology Index (XCI)
Dynamic Hardware & Consumer Electronics Intellidex Index (DZH)
NYSE Arca Computer Hardware Index (HWI)
NYSE Arca Disk Drive Index (DDX)
NYSE TMT Index (NYY.ID)
NYSE R&D Innovation Index (NYINOV8)
Transformation of Travel & Mobility
ICE FactSet Global NextGen Automotive Technologies Index (ICEFSNA)
NYSE Arca Airline Index (XAL)
Reinvestment in U.S. Infrastructure
Dynamic Oil Services Intellidex Index (DWO)
Dynamic Energy Exploration & Production Intellidex Index (DWE)
NYSE Pickens Core Midstream Index (NYPYPE)
NYSE Arca Oil Index (XOI)
NYSE Arca Natural Gas Index (XNG)
5G & Future of Communication
NYSE Arca Networking Index (NWX)
Dynamic Telecommunications & Wireless Intellidex Index (DWY)
Geopolitics
NYSE Arca Mexico Index (MXY)
NYSE Arca Defense Index (DFI)

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