Core Insights - The rise of AI has significantly impacted thematic investing, with real revenue and productivity gains expected to support markets long-term [1][3][4] - Global X's flagship AI fund, AIQ, has reached $7 billion in assets, with $3 billion in net new flows this year, indicating strong investor interest despite valuation concerns [3][4] - Thematic investing is evolving from passive strategies to more active management, with a notable shift towards niche sectors and subcategories [5][6][9] Thematic Investing Trends - Thematic investing has seen nearly $20 billion in flows year-to-date, with $15 billion specifically in AI-related ETFs [8] - There are currently 12 thematic categories and numerous subcategories, allowing for more targeted investment strategies [7][9] - The growth of thematic ETFs introduces tracking errors, necessitating thorough due diligence from investors [10][36] Market Dynamics - The number of ETF tickers has surpassed that of single stocks, reflecting the robust growth of thematic investing [11][12] - Institutional and intermediary clients are increasingly utilizing ETFs for diverse investment strategies, moving away from traditional mutual funds [28][29] - The lead time for launching new ETFs is approximately 75 days, indicating a responsive market to emerging investment themes [31] Long-term vs. Tactical Investing - Many themes are designed for long-term investment, but there are also tactical opportunities that attract short-term traders [20][21] - Some mature themes, like cloud computing, have experienced significant outflows as they become integrated into broader indexes [22][23] - Investors are encouraged to balance long-term allocations with tactical adjustments based on market conditions [25][24] Index Development and Methodology - The process of creating an index for ETFs is complex and requires careful consideration of transformative exposures [39][41] - Continuous collaboration with index providers is essential for developing durable and well-thought-out investment themes [41][42]