Investors have many choices when they want to invest in the stock market. Buying equities through vehicles like mutual funds, ETFs, and individual stocks is the most common way to invest.
The problem, however, is that there are thousands of mutual funds, ETFs, and individual stocks to choose from, and it’s hard to know when the time is right to invest in a fund or stock.
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Investors are left to wonder if they should invest in the broad market (for example, in the S&P 500). Or maybe tilt toward growth, value, the U.S., or foreign markets? Or should they take a more narrowly focused approach, such as specific themes like artificial intelligence?
Since the stock market is on pace for a second consecutive year of robust returns, many investors are likely uncertain about what to do with their money now. Here are five investment themes that investors can consider in 2025.
What is thematic investing?
Thematic investing involves focusing on a somewhat narrow range of stocks that may generate above-average growth in emerging industries or parts of the economy.
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Thematic investors typically target transformational industries or societal trends that have the potential to reshape industries and create new markets over time.
For example, companies operating in the FinTech or digital payments space, such as Block ( SQ ) or SoFi Technologies ( SOFI ) , might benefit from increased use of credit and debit cards worldwide, the deployment of new technologies like blockchain, and the introduction of cryptocurrencies like bitcoin (along with increased adaptation by consumers and large global financial firms that hold, trade and custody these assets).
A number of investment firms offer various thematic investments, including (mostly in ETF form) Goldman Sachs, JP Morgan, Global X, State Street Global Advisors, First Trust, Invesco, Advisor Shares, Blackrock (i Shares), Fidelity, Charles Schwab, and others.
Thematic investing examples
A few examples of thematic investments include stocks or funds that focus on electric vehicles, such as Tesla ( TSLA ) , obesity / GLP-1 weight-loss drugs like Eli Lilly ( LLY ) , cloud computing companies like Alphabet's Google Cloud ( GOOGL ) , cybersecurity, lithium, telemedicine, U.S. onshoring, renewable energy, online gaming, space companies like Rocket Lab USA ( RKLB ) , genomics, water scarcity, artificial intelligence, including stocks like Nvidia ( NVDA ) , robotics, marijuana or healthy eating.
Of course, this is just a small sample of the many themes investors can target, and there are many more stocks that could benefit from those themes than are listed above.
The pros and cons of thematic investing
Pros…
Cons…
Thematic investments worth considering in 2025:
Here are five intriguing themes that investors can target next year.
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Is thematic investing a smart move?
Thematic investing involves identifying and capitalizing on trends and themes that have the potential to drive long-term growth and market outperformance. Investors can access them in a number of ways, such as through ETFs, mutual funds, or individual stocks. In many situations, thematic investing means gaining access to companies or industries that are undergoing transformative change or rapid growth.
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This investment approach can offer investors a unique way to diversify their portfolios, align investments with personal values, and potentially achieve higher returns.
However, it's far from guaranteed that thematic investments will pay off, and even if they do, how long it may take to reap rewards.
As a result, thematic investing should be considered alongside more traditional investing (as opposed to a replacement for it) due to the potential risks and volatility sometimes associated with it. Investors should carefully consider these issues before pulling the trigger.
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