AIM 10 Thematic ETPs
Thematic ETFs provide exposures to narrowly-based benchmark indexes whose components are clustered with a specific purpose in mind (e.g., industry or sector, social concern). Such products create incremental risk exposure (i.e., residual risk) in the hope of higher return. In contrast, total market ETFs have no residual risk by definition.
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Theory suggests that investors should hold total stock market index products such as VTI or ITOT. Thematic ETFs are benchmarked to subsets of stocks based on a particular categorization or theme (e.g., industry or sector, social concern).
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Theory suggests that investors should hold total bond market index products such as BND or AGG. Thematic ETFs are benchmarked to subsets of bonds based on a particular categorization or theme (e.g., industry or sector, social concern).
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