One theme and fund for the next decade

In a market increasingly shaped by powerful macro narratives – from shifting inflation dynamics to the rise of artificial intelligence (AI) – thematic investing has never been more relevant.

“This is especially evident in the AI boom that has led the market since the release of ChatGPT in late 2022, where hundreds of billions of projected revenues require some leap of faith,” says Shavar Halberstadt, equity research analyst at Winterflood Securities.

“In such an environment, thematic investing is particularly well placed to navigate the market, by selecting a niche that benefits from macro tailwinds and leveraging specialist knowledge to invest in key beneficiaries.”

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We asked a range of experts to identify one theme for the next decade and the fund or vehicle they would use to capture it. The result highlights five powerful structural trends, expressed through investment trusts, active funds and exchange-traded funds (ETFs) – illustrating the diverse ways investors can access thematic opportunities.

Reshoring

The reconfiguration of global supply chains is one of the defining investment themes of the decade. For Lauren Smith, associate fund manager of EdenTree European Equity, which features in ii’s sustainable fund ACE 40 list, the drivers are as much political as economic.

“The Covid-19 pandemic exposed the fragility of the globalised system,” she says. “Since then, rising geopolitical tensions and the upending of global trade have elevated what was once a purely business concern into a matter of geopolitical stability and sovereignty.”

Governments are responding with significant regulatory and fiscal support. In Germany alone, around €500 billion (£441 billion) of infrastructure spending is expected over the next 12 years. Smith believes this wave of investment will benefit sectors such as construction materials, industrial equipment and energy infrastructure.

“The expansion of factories, manufacturing facilities and data centres requires building materials, pipes, cables, cooling equipment and other ancillary services – areas in which we already have holdings at attractive valuations,” she says, pointing to technotrans SE (XETRA:TTR1), Indus Holding AG (XETRA:INH) and Compagnie de Saint-Gobain SA (EURONEXT:SGO) as examples.

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Blair Couper, co-manager of the abrdn Future Supply Chains ETF USD Acc GBP (LSE:ASCH), says the shift towards reshoring and nearshoring reflects a broader realignment of priorities.

“Supply chains are no longer just about efficiency – they’re about resilience, sovereignty and strategic control,” he says. “The confluence of rising geopolitical tensions, trade fragmentation and green investment is creating a new set of winners and losers.”

Couper highlights Advantest, a Japanese company which makes equipment to test the fidelity of leading-edge semiconductor chips, and WiseTech Global Ltd (ASX:WTC), an Australian software business that helps automate complex freight and customs processes, as companies positioned to benefit.

Ageing population

Global life expectancy is projected to reach 77 years, with adults aged 60 and above expected to surpass two billion by 2050.

“Advancements in technology and improved medical services mean people are healthier for longer, enabling them to enjoy extended retirements,” says Dzmitry Lipski, head of funds research at interactive investor. “While this demographic shift presents challenges, it also unlocks compelling investment opportunities.”

For broad exposure, the iShares Ageing Population ETF USD Acc GBP (LSE:AGES) invests in companies supplying essential products and services to adults aged 60 and over, including medical devices, elder care and retirement services. The 340-stock portfolio is heavily weighted towards healthcare, financial services and insurance, making it best suited as a satellite holding, Lipski adds.

The trend of ageing populations was one of the key discussion points in interactive investor’s recent podcast episode, which focused on the outlook for the healthcare sector.

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Healthcare-focused investment trusts offer more targeted exposure. Anthony Leatham, head of investment companies research at Peel Hunt, notes that long-term demographic trends driving demand and innovation have been overshadowed by tariff and drug pricing uncertainty, but sentiment is now improving.

“Importantly, we are seeing a turning point in news flow and fund flows, supported by eye-catching M&A,” he says.

He highlights Worldwide Healthcare Ord (LSE:WWH) trust as well positioned to benefit from drug discovery, enhanced diagnostics, medical technology and AI, while James Carthew, head of investment companies at QuotedData, picks Polar Capital Glb Healthcare Ord (LSE:PCGH).

For a more focused life sciences approach, Leatham points to HBM Healthcare Investments AG Ord (SIX:HBMN), whose portfolio of both private and public companies is “well-stocked with potential catalyst events”.

Ageing populations was one of the key discussion points in interactive investor’s recent podcast episode. Credit: DMP/iStock.

Global instability

Periods of geopolitical upheaval often reshape investment priorities – and the current decade looks no exception.

Darius McDermott, managing director of FundCalibre, says: “Since the Second World War, the world has rarely felt as globally unsettled and prone to destabilisation as it does today. With shifting political dynamics driven by the Donald Trump administration and converging geopolitical flashpoints, investors face a landscape defined by uncertainty.”

In such environments, he argues, real assets have historically stood out. McDermott’s pick is the Cohen & Steers Diversified Real Assets F Acc GBP fund, which blends listed real estate, infrastructure, commodities and natural resource equities – “assets that don’t just endure inflation and political volatility but often benefit”.

William Heathcoat Amory, managing partner at Kepler Partners, notes that rising geopolitical tension has reshaped perceptions of the defence sector, which has seen renewed investment and policy support following the invasion of Ukraine in 2022 and the election of Trump in 2024.

“From being a pariah sector for some investors, the defence sector has had a remarkable return to favour,” he says.

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Among the ii Super 60 investment ideas, he points to City of London Ord (LSE:CTY) in the UK equity income sector, which has benefited from its holding in BAE Systems (LSE:BA.), and The European Smaller Companies Trust PLC (LSE:ESCT), which has made strong returns from industrial defence names such as night-vision equipment maker Exosens SA (EURONEXT:EXENS).

Instability takes many forms. Ben Yearsley, director at Fairview Investing, highlights insurance as an indirect play.

“Is the weather becoming more unstable? Maybe. Are cyber-attacks more common? Possibly. Specialist insurance companies will cover these events,” he says.

Polar Capital Global Insurance invests in reinsurers and catastrophe insurers, and “has delivered about 10% each year for over two decades”, Yearsley adds.

Space tech

Heightened geopolitical tensions, rising defence spending and climate change are converging to make space technology a compelling long-term investment theme. Satellites and related technologies are increasingly critical for intelligence, secure communications, advanced defence capabilities and space-based monitoring of climate and extreme weather events.

According to Halberstadt at Winterflood Securities, “Seraphim Space Investment Trust Ord (LSE:SSIT) is perfectly positioned to capture these dynamics, as it offers exposure to a range of growth-stage private companies, and is one of very few pure-play space-tech vehicles available”.

Winterflood flagged the trust as an opportunity in January 2024 when it traded on a 56% discount. It has since returned around 100%, with the discount narrowing to 27.4%.

“We believe the story has further room to run, based on operational progress at the portfolio level, with many companies winning substantial government contracts and entering partnerships with established defence players,” says Halberstadt.

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The largest holding, European satellite company ICEYE, is approaching profitability and has stated its intention to IPO. On the climate front, the portfolio stands to benefit from holdings in SatVu, Tomorrow.io and PlanetWatchers on a decade-long view.

Halberstadt adds: “It is not unthinkable for climate emergencies to occur over that time frame, re-establishing climate concerns at the top of corporate and political agendas.”

Critical resources

For 7IM, the energy infrastructure required to support rising demand for power is often overlooked.

Ben Kumar, head of equity strategy, says: “After decades of being seen as boring, utilities companies now find themselves as gatekeepers to the future. You can have all the semiconductor chips you like and as many high-paid tech engineers as you can find, but without power and transmission, you’ve got a room of silicon and some unemployed nerds.”

To capitalise on the theme, 7IM bought into the Xtrackers MSCI World Utilities ETF 1C GBP (LSE:XWUS) at the start of 2025.

“It has outperformed pretty much every other sector since then – and we see that continuing,” adds Kumar.

For EQ Investors, water sits alongside energy as a vital resource in short supply, particularly in areas hosting resource-intensive data centres.

“While some investors are contemplating which semiconductor company may dethrone NVIDIA Corp (NASDAQ:NVDA) from its near monopoly on advanced chips, our attention is drawn to the huge supply constraints that the AI infrastructure build-out is facing,” says portfolio manager Tertius Bonnin.

The wealth manager accesses this theme through the Regnan Sustainable Water and Waste AGBP fund.

“This fund provides investors with exposure to this increasing level of demand for water, which is so vital for not just cooling data centres but throughout the whole semiconductor manufacturing process,” he adds.