Key Success Factors in Investment Funds and the Diversification Approach in Thematic Investing

While numerous variables influence the performance of investment funds, the fundamental determinant of success is how well the fund’s investment theme, sector, or asset class aligns with the overall market trend. Even if one were to invest in a fund managed by the world’s most successful fund manager during an economic crisis, achieving returns would be extremely difficult under adverse market conditions. This highlights how significantly market conditions drive returns and, consequently, how decisive they are in shaping investment outcomes.

The first step toward achieving successful returns is to invest in asset classes or themes experiencing an upward trend—where there is strong demand for buying. In a market with such positive sentiment, investments in the right themes have a considerably higher probability of generating positive returns.

However, beyond the potential of the theme itself, the fund’s management strategy is equally critical. Two main approaches dominate fund management: passive and active management.

Passive Management

In passively managed funds, the portfolio is structured in alignment with the components of a predetermined index. As a result, the fund’s return is directly linked to the performance of its benchmark. These types of funds aim to replicate general market performance with minimal management fees.

Active Management

In actively managed funds, the fund manager deviates from the benchmark based on specific analyses to invest in assets with perceived higher potential. This approach emphasizes the manager’s expertise, experience, and foresight. However, it also comes with higher management fees, as the goal is not merely to match the market average—but to exceed it.

When choosing between these two strategies, investors must consider not only potential returns but also the nature of the associated risks. The success of investment funds is not solely measured by high returns but also by the risk level at which those returns are achieved. Particularly, thematic funds inherently carry higher risk as they concentrate on a specific sector or theme. Therefore, thematic investments that do not align with an investor’s risk profile and investment horizon may lead to unfavorable outcomes.

The Importance of Portfolio Diversification

At this stage, portfolio diversification plays a critical role. Rather than investing in multiple funds focusing on the same theme, combining funds that invest in different, low-correlation themes can help reduce overall portfolio risk while enhancing the potential for consistent returns.

For instance, instead of investing solely in a technology fund focused on artificial intelligence, an investor might also consider funds with themes such as gaming technologies, space and robotics technologies, or defense industries. This approach helps mitigate theme-specific risks and balances potential volatility in one area with positive performance in others—resulting in a more stable return profile.

Diversification Example with BV Portföy’s Thematic Fund Options

At BV Portföy, we offer a range of thematic fund options that provide investors with access to diverse sectors and long-term transformational themes. Each fund is structured around a distinct sector or theme, helping investors diversify their portfolios and participate in strategic trends:

• BTE – BV Portföy Gaming & Technology Variable Fund: Focuses on areas such as mobile gaming, virtual reality, and e-sports. It aims to turn the rise of the digital entertainment industry into an investment opportunity, prioritizing both local and global game developers and tech providers.
• BVV – BV Portföy Technology Variable Fund: Targets technology-driven themes like artificial intelligence, big data, and cybersecurity. Ideal for investors who believe in innovation and long-term digital transformation.
• SPR – BV Portföy Sports Industry Variable Fund: Invests in the professionalized sports industry—from clubs to digital broadcasting rights, and from sports tech to global brands. Closely integrated with entertainment and media sectors.
• RUT – BV Portföy Robotics and Space Technologies Variable Fund: Covers strategic industries such as defense, autonomous systems, satellite technologies, and industrial automation. Offers a forward-looking vision aligned with technological transformation.

Informed Decision-Making for Long-Term Thematic Investing

When making investment decisions, investors should not rely solely on past performance. They must also consider qualitative metrics such as the fund's management strategy, its relative performance versus its benchmark, risk-return ratios, and the total expense ratio. This enables a more conscious selection of funds that not only promise growth but also offer sustainable and consistent performance.

Such an approach transforms thematic investing from merely following trends into a long-term, conscious, and balanced investment strategy.

Take Confident and Informed Steps with BV Portföy

To make secure and informed investment decisions, and to approach thematic funds with a professional perspective, get in touch with the experts at BV Portföy today.