Foundational AI for the Future of Thematic Investing
The global economic landscape is changing rapidly, forcing the investment industry to evolve. Investors are demanding more cost-effective solutions and sustainable financial products alongside deeper thematic insights into corporate activities and exposures.
Named after the Greek goddess of sight, Theia Insights provides the missing thematic perspective. Our core solutions are: Theia Insights Industry Classification (TIIC) — explaining what companies do, and Thematic Factor Model — explaining what investors do. These solutions are central to the investment process, supporting:
- Portfolio construction
- Analysis and optimisation
- Risk management and mitigation.
Theia Insights Industry Classification (TIIC)
Theia Insights Industry Classification (TIIC) maps the universe of companies to a universe of themes, explaining “who does what by how much”.
Theia’s proprietary TIIC taxonomy spans from 10 broad sectors to over 3,000 micro themes, and dynamically adapts to both changes in the economic landscape and changes in a company’s business activities and exposures. Each company’s business activities are mapped to themes such as Artificial Intelligence and Cybersecurity. We offer and quantify each company’s exposure to said themes.
A topical example, as of July 2024, TIIC estimates Nvidia's (NASDAQ: NVDA) business activities as 30% Semiconductor, 21% Artificial Intelligence, 15% Data Center & High-Performance Computing, with additional exposures to Software, Video Gaming, and Cloud Computing. This granular breakdown offers investors a nuanced understanding of a company's diverse business activities and how they evolve over time.
Theia Insights Thematic Factor Model (TFM)
Imagine being able to deconstruct a stock's price movements like isolating individual instruments in a complex musical piece, that’s exactly what Theia's Thematic Factor Model (TFM) aims to achieve. By breaking down price movements into more than 200 thematic factors, TFM provides a precise thematic lens for analysing stock and portfolio performance.
This approach goes beyond traditional factor models, making it particularly suited for thematic investing, which has become an increasingly important driver of market movements and volatility. Again, in the case of Nvidia (NASDAQ: NVDA), TFM reveals that Nvidia's price in recent weeks has been more heavily influenced by Data Centers & High-Performance Computing, and Artificial Intelligence than by the Semiconductor Chips, Design & Manufacturing theme. Investors are keen to explore what else is being driven by certain themes, to what extent, and if these moves are warranted or present opportunities for alpha generation, profit-taking or risk management.
Theia Insights ETF Thematic Exposures (ETFTE)
Given the increasingly important role that Exchange-Traded Funds (ETFs) play in the markets today, Theia has built a comprehensive dataset and breakdown of thematic exposures across the universe of global ETFs. This tool allows investors to compare ETFs based on their thematic composition, find similarities and differences, and discover ETFs that complement or diverge from their existing holdings. Furthermore, it allows investors to take single stocks and identify ETFs that offer similar thematic exposures with the benefit of diversification.
Theia Insights Concept2Universe (C2U) Model
Theia’s C2U model is a powerful tool that translates broad thematic concepts into investable universes quickly and reliably. Whether you're interested in Artificial Intelligence, clean energy, healthcare, fintech, obesity or anything else, our C2U model creates custom taxonomies consisting of all relevant sub-themes and a quantified list of relevant companies beyond the obvious names.
This model has practical applications beyond traditional investing. For instance, Theia has created thematic universes aligned with the UN Sustainable Development Goals, offering a novel approach to ESG evaluation and portfolio construction.
The Power of Thematic Insight
By combining these powerful solutions, we offer comprehensive tools for thematic investing. With our solutions and expertise, investors can:
- Gain a deeper understanding of company activities and their evolution over time
- Analyse stock and portfolio performance through a thematic lens
- Compare and contrast ETFs based on their thematic exposures
- Quickly generate investable universes for emerging themes and concepts.
The global economy is rapidly evolving, driven by themes like Artificial Intelligence, renewable energy, and biotechnology. Theia's tools help investors identify and capitalise on these transformative trends, including critical issues like climate change.
As thematic investing continues to gain prominence, Theia is positioned at the forefront of this revolution and here to serve you. Our mission is to empower investors to see the market clearly and invest in the future they believe in.