Welcome to Thoughts on the Market. I'm Graham Secker, head of the European and UK

Equity Strategy Team. And I'm Ed Stanley, head of European

Somatic Research. And today on the podcast, we'll be talking about the continued

interest in thematic investing in Europe. It's Thursday, August 12th, at 3pm in London.

So Ed, I really wanted to talk to you today because invest the appetite for thematic-related

equity products, such as ETFs, mutual funds and a like, has grown to the point that

thematics has actually been carved out from our traditional sector research at Morgan

Stanley. So as head of the European thematic investing team, can you walk us through

what's behind the increased interest in this area, and how you see the thematic landscape

evolving over the next couple of years? Thanks, Graeme. To understand thematics, first

you have to look at the geographies. And when you do that, it's really a two-horse

race of the $450 billion in global thematic mutual funds in June this year, 60% of that

was in Europe, so the lion's share. And then there's a US, which is the second largest

geography for thematic investing, but growing very quickly indeed. If you look in the US

year-to-date, for example, there have been over 100 thematic ETF launches comfortably double

the run rate of thematic starts in 2020. Once you've looked at geography, then you have

to look at the landscape by theme. And this is where thematic investing gets really interesting.

The breadth of and growth in thematic strategies is truly extraordinary. Funds start to

compounding over 40% over the last three years, and inflows for those funds have seen high

double digit and even triple digit growth so far this year. Most obviously, themes like

genomics and esports fall into that high growth category. We even saw a dedicated ETF launch

in June this year, particularly trying to gain exposure to the metaverse, which is the

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