The Evolving Economy

The Evolving Economy is all about identifying companies that are tapping into multi-decade demographic and technological changes, regardless of their region or sector classifications.

What is thematic investing?

Thematic investing – often called trend investing or mega-trend investing – is a broad term used to describe investment approaches which focus on certain economic, corporate, social or technological themes. In today’s highly disruptive world, these themes are typically centred around the main two drivers of long-term corporate behaviour – demographic shifts and technological changes.

The five Evolving Economy themes we have identified are the result of long-term demographic trends and technological developments. We believe they offer equity investors access to the best opportunities for long-term structural growth, regardless of how the companies are defined geographically or from a sector perspective.

Does thematic investing work?

We believe that geographic or investment sector definitions – which were once a convenient way for investors to classify companies and decide asset allocations – must evolve to meet the reality that the world is increasingly complicated and more connected than ever before.

A thematic investment approach can therefore help investors:

  • Tap into drivers of long-term change and growth
  • Better identify companies’ longer-term prospects
  • Articulate particular investment convictions

Is thematic investing a long-term approach?

We believe that thematic investing should fundamentally seek long-term outcomes for investors and is therefore a rational rather than fashionable approach. In fact, we see the thematic approach as the new normal of equity investing.

While many individual themes or trends can capture investors’ attention, it’s important to take a nuanced and diversified approach. This can help investors mitigate any volatility and cyclicality which may arise from a theme having a small or concentrated investible universe. Picking the right – and most sustainable – themes is of course crucial too, and you can read more about how we choose our themes here.

How can investors access the Evolving Economy?

To help people invest in the companies that are embracing these changes, we have adapted our internal research capabilities at Framlington Equities to incorporate the five main trends that we believe represent the future of long-term fundamental growth investing:

Active thematic investing

We believe that active management is crucial to adding value when investing in such long-term thematic opportunities. Accordingly, our team seeks to identify the companies that are best placed to benefit from the themes, rather than just investing in a basket of stocks exposed to the theme.

Disruption in the corporate world is dynamic in nature, and it is therefore critical to identify the individual long-term winners – as there are winners and losers even in areas of high structural growth.

Understanding the difference between short-term hype and longer-term commercial reality is therefore crucial for investors looking for sustainable performance.

A thematic approach can also help investors understand how companies that are evolving their business models might fare going forward – for example, a company which still generates most of its revenues today from a traditional business or product may also be making great strides into a new industry or customer base that will make it a compelling long-term investment for tomorrow.

Why AXA IM for thematic investing?

Rigorous selection process to identify long-term growth themes

To differentiate market hype from the investable reality when identifying long-term trends, we look for evidence (like research/statistics from relevant and credible sources) that the theme has the potential to deliver 10% or more year-on-year growth over the next decade.

Year-on-year growth outlook


Active approach for sustainable long-term outcomes

As companies become more global and more multi-sectoral in scope, understanding a business’s market, strategy and customers is crucial to identifying the long-term winners and losers within a theme.

Our active selection approach is rooted in Framlington Equities’ fundamental philosophy of selecting high-quality companies we think have the highest potential, rather than just investing in a basket of stocks that operate in a certain sector.





Time-tested active
approach since our
inception in 1960

  Focus on companies with the proven ability to deliver commercially sustainable results from innovations   100s of meetings each
year with company
management helps us
identify winners and losers

Focus on thematic purity through innovative proprietary research

To give investors access to long-term drivers of returns, we have evolved our collaborative research organisation to prioritise thematic exposure over geographic or sector considerations, which are less relevant for evaluating today’s multi-sector businesses.


Collaborative research pods help us combine deep expertise with a best-ideas approach

Our proprietary thematic exposure database also allows us to quantify companies’ levels of exposure to specific themes throughout the Evolving Economy, across a universe of approx. 11,000 companies:


Our portfolios tend to have a high level of purity related to the themes. Typically more than 70% of stocks in our portfolio have high or medium exposure to a specific growth theme. This ensures high thematic purity with suitable diversification, while also allowing us to invest in companies with high potential at an earlier stage of tapping into a long-term trend or changing their business focus. 


Note: All figures quoted are from AXA IM and correct as at 30 September 2020. Growth targets are internal, for illustrative purposes only, and are not guaranteed. All investments involves risks, including the loss of capital.

* UN World Population Ageing Report 2015
** Boston Consulting group, 2014. There is no guarantee that forecasts will be met. For illustration purposes only
*** UN 2013
**** Brookings Institution, 2017
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