Investing based on themes like artificial intelligence can be risky, as history shows with past trends like the internet. Morningstar’s Thematic Consensus Indexes highlight challenges thematic investors face, with some themes outperforming and others underperforming the market over the past five years.

While tech-focused themes have performed well, healthcare sectors like Wellness and Life Sciences have lagged due to policy concerns. Battery Technology has also underperformed, impacted by oversupply issues affecting lithium producers.

Thematic investors should consider portfolio exposure overlap with tech-heavy indexes and question the necessity of separate thematic investments. High correlations between themes and the broad market raise concerns about redundancy. Contrarian investors may find opportunities in underperforming or less-correlated themes for diversification.

Morningstar’s indexes showcase the performance of various thematic consensus indexes, providing insights into the challenges and opportunities faced by thematic investors in the market.

Read more at Morningstar: The Investment Themes That Are Outperforming AI