If you opened your news app this morning, you probably saw stories about AI reshaping industries, defence spending hitting record highs, and governments racing to secure energy security. Each of these headlines ties into what investors call ‘megatrends’: the long-term forces or ‘themes’ reshaping the global economy and everyday life.
So far, 2025 is shaping up to be a strong year for thematic investing.
After a year dominated by big technology names, smaller and faster-growing companies are now starting to shine.
In fact, over half of the investment themes tracked by WisdomTree have beaten the global stock market this year.
The strongest trends?
Nuclear energy, defence, rare earth miners, quantum computing and renewable energy, among others.
Megatrends: a different kind of growth strategy
For retail investors, megatrends offer a way to invest in powerful, long-term forces reshaping industries and societies.
But capturing those trends isn’t always straightforward.
Many investors fall into the trap of trying to pick the ‘winning’ theme at the ‘right’ time, chasing what’s hot and exiting when sentiment cools.
History shows that when hype overtakes fundamentals, even promising ideas can underperform.
The key is learning to separate long-term growth drivers from short-term excitement, and building an investment portfolio that lasts well beyond the next news cycle.
That’s why investing across a range of these growth themes is so important. It helps smooth out the inevitable ups and downs that come with investing in individual trends, while keeping investors aligned with the broader themes shaping the global economy.
When WisdomTree launched the WisdomTree Megatrends UCITS ETF, the aim was clear: to build a portfolio that could identify tomorrow’s winners, not just follow today’s big names.
While much of the market remained focused on the ‘Magnificent 7’ mega-cap tech stocks, we chose to look beyond them, towards the next generation of long-term growth themes.
That approach has paid off.
Since its launch in October 2023, the Megatrends strategy has outperformed the Nasdaq 100 by 6.33% and the MSCI All Country World Index by 19.85%, despite only investing around 3% in the Magnificent 7.
Instead, the Megatrends ETF invests across high-potential areas like AI, clean energy and global defence, sectors that could define the next decade of market growth.
In total, the Megatrends strategy has delivered a 79% return since it launched, compared to 59.1% for the MSCI All Country World Index.
This shows that diversification across powerful themes can be a strength rather than a compromise.
WisdomTree Megatrends strategy: how is it different?
Since launch, the WisdomTree Megatrends UCITS ETF has outperformed its five biggest peers by more than 21% on an annualised basis.
So, what’s driven this outperformance?
The WisdomTree Megatrends strategy is built around a disciplined, three-layered approach designed to adapt to changing markets:
- Identifying powerful long-term themes
Our research team selects long-term trends with strong growth potential, from sustainability to digital transformation.
- Tactical flexibility
The portfolio adjusts every three months to reflect what’s doing well and stay aligned with the strongest themes. The portfolio will tilt towards stronger-performing themes by buying more of what’s doing well and selling what’s not doing as well. This helps it benefit in both optimistic and more cautious markets.
- Stock selection
Within each theme, we focus on companies that are most closely aligned to the underlying trend. To do this we leverage specialist knowledge to make sure the portfolio is focused and staying true to its goal. For example, we partner with Wood Mackenzie, the global commodity consultancy, to inform which stocks we pick within the strategic metals and rare earth miners theme.
So far, this differentiated approach has led to differentiated performance.
Which trends do we invest more and less in?
| Tactical positioning compared to strategic one (18 July 2025) | |||
| Theme | Positioning | Tactical Signal | Weight |
| Aging Population | Underweight | 50% | 1.8% |
| Artificial Intelligence & Big Data | Overweight | 150% | 9.4% |
| Blockchain | Overweight | 150% | 6.9% |
| Cloud Computing | Underweight | 50% | 9.7% |
| Cybersecurity | Underweight | 50% | 10.0% |
| Digital Infrastructure | Underweight | 50% | 4.1% |
| Energy Transition Materials | Overweight | 150% | 4.6% |
| HealthTech | Underweight | 91% | 3.5% |
| Nuclear | Overweight | 150% | 6.3% |
| Quantum Computing | Overweight | 150% | 6.4% |
| Rise of China Tech | Overweight | 150% | 8.1% |
| Rise of EM Consumer | Underweight | 50% | 4.4% |
| Rise of Tension | Overweight | 150% | 7.4% |
| Rise of the Middle Class | Underweight | 50% | 1.7% |
| Semiconductors | Overweight | 150% | 2.8% |
| Sustainable Energy Production | Overweight | 150% | 6.1% |
| Sustainable Energy Storage | Overweight | 150% | 3.1% |
| Sustainable Food | Underweight | 50% | 3.8% |
What’s been driving recent performance of megatrends?
The WisdomTree Megatrends UCITS ETF (WMGT) has delivered 10.2% outperformance versus the MSCI All Country World since the most recent rebalancing in July 2025.
Four themes stood out:
- Renewable energy (+1.79% contribution) rebounded strongly as global energy demand sped up.
- Rare earth and strategic metals miners (+1.54%) benefited from investors’ refocusing on resource security.
- Rise of China technology (+1.62%) remained resilient following major innovation announcements earlier in the year.
- Blockchain (+1.45%) continued to grow as regulation improved, especially in the US.
In total, 14 out of the 18 themes added value during the period, which is a strong sign of how balanced the performance drivers have been.
How much do we invest in each theme?
Importantly, the WisdomTree Megatrends UCITS ETF isn’t designed to be a large part of your ‘core’ portfolio. Instead it’s there to help you invest in the themes you care about and help add some extra diversification to an already well-diversified portfolio.
Looking ahead with megatrends
As the global economy evolves, thematic investing is becoming an essential way to invest in long-term growth.
The WisdomTree Megatrends strategy brings together the most powerful long-term trends shaping our world, from clean energy and digital innovation to new frontiers in science and technology, all within one, well-balanced strategy.
By investing in Megatrends, you’re not just following today’s market leaders, but positioning for the next generation of growth.
If you’d like to find out more about megatrends investing, please visit our strategy page or insights centre.
You can explore WisdomTree’s range of ETFs on InvestEngine here.
FAQs on megatrends outpacing tech giants
1. What are megatrends in investing? Megatrends are long-term forces shaping the global economy, such as AI, clean energy, defence, and digital innovation. They focus on structural shifts rather than short-term market movements and give investors a way to align with changes likely to influence industries for years.
2. Why are megatrends performing strongly in 2025? In 2025, many high-growth themes beyond the large US tech names have gained momentum. Areas such as nuclear energy, defence, rare earth miners, quantum computing, and renewable energy have benefited from rising demand, policy support, and renewed interest in innovation.
3. How has the WisdomTree Megatrends UCITS ETF performed? Since launching in October 2023, the strategy has outperformed both the Nasdaq 100 and MSCI All Country World Index, despite having only a small allocation to the “Magnificent 7” tech stocks. This highlights the strength of looking beyond mega-cap technology when seeking long-term growth.
4. What makes the WisdomTree Megatrends strategy different? It uses a three-layered process: identifying long-term themes with strong potential, tilting towards themes showing strength through quarterly adjustments, selecting companies closely aligned with each trend using specialist research. This structured approach aims to stay adaptive while keeping the portfolio focused.
5. Why does the ETF invest relatively little in mega-cap tech? The strategy looks beyond today’s biggest names to capture the next generation of growth themes. Rather than concentrating on a handful of dominant companies, it spreads investment across emerging areas such as AI infrastructure, clean energy, and strategic materials.
6. How often does the Megatrends portfolio change? The portfolio is reviewed and adjusted every three months. This helps it stay aligned with the strongest-performing themes, increasing exposure where momentum is positive and reducing areas that are lagging.
7. Which themes are currently strongest in the strategy? Recent performance has been supported by renewable energy, rare earth and strategic metals, China technology, and blockchain. 14 out of 18 themes contributed positively after the last rebalance, showing diversified performance drivers rather than reliance on a single sector.
8. Is a Megatrends ETF suitable as a core investment? The strategy is not designed to be a core portfolio on its own. It is intended as an additional way to gain exposure to long-term structural trends, complementing a well-diversified core portfolio such as a broad global equity or balanced ETF mix.
9. How does the ETF decide how much to invest in each theme? Weights are adjusted using a tactical signal, which increases exposure (overweight) to themes showing relative strength and reduces exposure (underweight) where performance is weaker. This helps the portfolio adapt to changing markets while staying aligned with long-term themes.
10. What should investors consider before investing in thematic ETFs? Thematic investing focuses on long-term trends, but individual themes can be volatile, and returns may vary over time. Investors should check how a thematic allocation fits with their goals, risk appetite, and wider portfolio. Investments can go down as well as up, and you may get back less than you invest.
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