Of course, this is often warranted as managers and their analysts pour over hundreds of company accounts and attend as many meetings to assess companies’ management teams.
However, few firms operate within a macroeconomic vacuum and many have had huge success over the longer term as their business and profitability is buoyed by changes in demographics and consumer tastes.
While specialist funds can have much higher levels of volatility than conventional equity or absolute return funds, the potential to cash in on longer term trends can make an attractive diversifier away from the movements of traditional markets.
Here we look at five exchange traded funds (ETF) that play a long-term global theme.
Agriculture - ETF Securities Agriculture
The ETF Securities Agriculture fund invests in food producers with the aim of tracking a basket of agriculture commodity futures contracts by replicating the Dow Jones-UBS Agriculture sub-index.
Investors here can play the theme of global population growth and what this will mean for food producers.
The global population, currently estimated at 7bn, is expected to grow by another billion people over the next 10 years, according to the UN. Also, the rise in consumer spending on foodstuffs is tipped to grow as incomes rise.
Furthermore, demand for foodstuffs, particularly staples, tends not to be cyclical and therefore less subject to sharp market movements - which can act as diversifier against other equity exposure.
However, most agricultural stocks are susceptible to weather related shocks such as extreme cold weather or bumper harvests.
The ETF has returned 36.62 per cent since it was launched in October 2006 compared to a gain in the index it tracks of 48.71 per cent.
Performance of ETF and index since Sep 2006
Source: FE Analytics
Clean energy – iShares Global Clean Energy
The demand for energy is also growing as the world becomes more urbanised, mobile and involved with consumption.
However, widespread concern over the impact of fossil fuels has led to tens of billions pounds in investment to ‘cleaner’ and renewable energy.
The iShares Global Clean Energy ETF invests in energy companies specialising in electricity generated by solar, wind and water power across both developed and developing markets.
The ETF has lost 64.67 per cent since it was launched in August 2007, suffering a particularly sharp fall during the financial crisis.
However, it has rallied over the past two years and has returned 80.15 per cent.
Performance of ETF over 2yrs
Source: FE Analytics
The ETF has an ongoing charges figure [OCF] of 0.65 per cent.
Water - iShares Global Water
More people and greater economic activity mean steadily increasing demand for water around the world.
The iShares Global Water ETF invests mostly in developed market water companies with more than 80 per cent of its portfolio in the US, UK and Europe.
Its largest holdings include United Utilities, American Waterworks and Severn Trent.
The ETF has returned 84.48 per cent since it was launched in 2007, albeit with significant volatility that has seen it lose up to 25 per cent over a month.
Performance of ETF and index since April 2007
Source: FE Analytics
The ETF has an OCF of 0.65 per cent.
Africa – DB X-Trackers MSCI Africa Top 50 index
Africa is home to some of the fastest growing economies and companies thanks to a newly found confidence after decades of famine, disease and war start to be replaced by a new era of commercial vibrancy and inward investment.
Top holdings of the DB X-Trackers MSCI Africa Top 50 ETF include Commerical International Bank, Nigerian Breweries, Guaranty Bank and Zenith Bank.
Banks in particular have been touted as one of the sectors set for huge growth due to the close connection to economic growth and the very low penetration of bank accounts amongst the continent’s nearly 1bn population.
This ETF tracks the performance of the 50 largest companies in the MSCI Africa index.
The ETF has returned 35.78 per cent over the past three years compared to a gain in the index of 38.94 per cent.
Performance of ETF and index over 3yrs
Source: FE Analytics
The ETF has a total expense ratio of 0.45 per cent.
Rare earths – UBS ETF Stoxx Global Rare Earth
Demand for this collection of minerals has exploded in the last 20 years due to their importance in a range of products such as smartphones that have become globally consumed.
However, supply issues abound due to a quota system in China.
More than 90 per cent of production is located in China, which has a strict system of control over the non-substitutable minerals. Supply is also forecast to increasingly short fall of demand as their uses become greater.
Over half of the holdings in the fund are based in North America, 34 in Australasia and around 15 per cent in the Pacific basin. Top holdings include Lynas, China Rare Earth and Tasman Metals.
The ETF has lost 81.76 per cent since it was launched in November 2011, a period where many mining and commodity stocks have suffered.
Performance of ETF over 3yrs
Source: FE Analytics
The ETF has an OCF of 0.45 per cent.
