Thematic ETFs are flying, but are they worth buying?

Many factors can be thanked for the rich market returns that have marked 2024. Interest rates have eased and the global economy has seemed more resilient than some expected. And one particular investment theme, in the form of artificial intelligence (AI), has helped turbocharge performance for the US megacap, shares among others.

That reminds us of the power of a market narrative, as well as the fact that tech plays and racy growth stocks can still make huge gains even at a time when they already looked expensive on a variety of measures. It also has a knock-on effect for portfolios: it forces us to consider whether to take profits in certain places, for example.