Short positions... beware thematic funds

⬛ Fund fees have fallen globally over the last three years in the latest sign that active managers are “feeling the heat” as investors turn to cheaper products, says the Financial Times. Research from Morningstar found that fees have dropped in most of the 26 countries it studied. In major markets such as the US, fees have fallen by more than a quarter since 2010 due to a combination of regulatory intervention and the increase in passive funds that charge lower fees. This has “pushed active managers to slash costs to compete, while putting strain on their margins”. But fees remain high in regions where funds are mostly sold through banks, such as Italy, Taiwan, Hong Kong and Singapore.

⬛ Greencoat Renewables has raised €281.5m in an oversubscribed fundraising, says Investment Week, in the latest sign of strong demand for green assets. The offer price of €1.12 was a 6.5% premium to the trust’s net asset value. ⬛ Funds that invest in popular growth themes, such as artificial intelligence or renewable energy, are growing fast, says Morningstar. In the three years to the end of 2021 assets held in thematic funds grew to $806bn from $225bn worldwide. Technology-themed funds, such as the ARK Innovation ETF run by Cathie Wood (pictured), had the largest share of inflows in 2021. But investors should be cautious, since long-term performance of thematic funds is often poor. Over the past ten years, just 22% of US-based thematic funds beat a global stock index, while 60% were ultimately closed.