Detecting exuberance phenomena in thematic investing

Maria Debora Braga, Giulia Genoni and Gianmarco Vacca

Finance Research Letters, 2025, vol. 75, issue C

Abstract: Thematic investing is an investment approach that recommends exploiting investment opportunities prompted by structural transformations called megatrends. Its peculiarities may provide a fertile context for the occurrence of bubbles. This study contributes to the empirical analysis on this topic. It is carried out with reference to the thematic benchmarks developed by MSCI and inspired by the megatrend ”Transformative Technologies”. The results, obtained with Levels based on Recent Discovery, or LORD, for the real-time detection of bubbles, confirm and date their occurrence. This study has implications for investors in terms of how to approach thematic investing and allocate to thematic investments.

Keywords: Thematic investing; Bubbles dating; Unit root test; Multiple testing; Megatrends (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001539

DOI: 10.1016/j.frl.2025.106889

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