Until a few years ago, many of our clients were sceptical about investing in technology and innovation. The scars of the dot-com bubble ran deep, and there was understandable mistrust of the wave of high-growth, asset-light companies that flooded markets after the global financial crisis. That scepticism, while reasonable given the history, became increasingly difficult to sustain as the structural transformation of the global economy gathered pace.
What followed was not a bubble inflating and deflating — though parts of the market certainly behaved that way. It was something more fundamental: the emergence of a small number of genuinely dominant technology platforms, the rapid commoditisation of AI capability, and a reorientation of global capital spending around digital infrastructure that shows no sign of reversing. Understanding these shifts matters not because technology is exciting, but because ignoring them creates a different kind of risk — a portfolio that drifts out of alignment with how the world actually generates returns.
This piece looks at what has actually happened since 2020, where the durable structural trends are heading over the next decade, and how thematic investing fits into a properly constructed portfolio — without the hype, and without the mistake of treating every theme as an opportunity worth owning.
Key Definitions
Thematic investing
An approach to portfolio construction that allocates capital to specific structural trends — such as artificial intelligence, energy transition, or robotics — rather than tracking broad market indices or selecting stocks on individual company fundamentals alone.
Secular trend
A long-term structural shift in an economy, industry, or technology that plays out over a decade or more, driven by factors that are largely independent of short-term economic cycles. AI adoption and energy grid modernisation are current examples.
Satellite allocation
A portfolio construction concept in which a smaller portion of capital (typically 5–20%) is allocated to higher-conviction, more concentrated positions — thematic funds, active strategies, or sector exposures — alongside a larger diversified core.
Concentration risk
The risk that a portfolio’s returns become overly dependent on a narrow set of positions, sectors, or themes. In thematic investing, this is the primary risk to manage: a theme that is directionally correct can still destroy value if sizing is wrong or the entry point is poor.
What Actually Happened: 2020–2025
Before projecting forward, it is worth being honest about what the last five years actually delivered — and what they didn’t. Not every theme that looked compelling in 2020 or 2021 proved durable. The period was defined by two very different phases: a liquidity-driven expansion in which almost everything with a technology label appreciated, followed by a sharp and painful correction as interest rates normalised.
What survived the correction, and in many cases thrived through it, was a narrower set of genuinely dominant businesses with pricing power, structural revenue growth, and the capital base to compound advantage over time. The five structural shifts that defined the period:
Generative AI moved from research to infrastructure
The deployment of large language models at scale — from enterprise software to consumer applications — compressed what would typically have been a decade of adoption into roughly three years. More significantly, the investment required to build and operate AI infrastructure (data centres, GPU clusters, energy capacity) triggered a capital spending cycle that is still accelerating. Nvidia’s revenue growth in this period was not a valuation story; it was a genuine demand signal for the underlying infrastructure buildout.
Cloud became critical infrastructure, not just a cost-saving tool
The shift of enterprise computing to cloud platforms moved from optional to effectively mandatory across most industries. AWS, Azure, and Google Cloud became infrastructure in the same way that electricity grids are infrastructure — not exciting, but load-bearing for everything above them.
Semiconductor sovereignty became a geopolitical priority
Government intervention in chip manufacturing — through the US CHIPS Act, European semiconductor policy, and significant South-East Asian investment — reflected a recognition that semiconductor supply chains were too concentrated and too strategically important to leave entirely to market forces. This created a multi-decade investment cycle in domestic manufacturing capacity that extends well beyond the cyclical patterns that historically defined the sector.
Digital platforms matured into economic pillars
The platform businesses that looked like disruptors in 2015 — Amazon in commerce, Meta in social advertising, Alphabet in search and cloud — became the dominant incumbent structures in their respective markets. The disruption phase ended; the compounding phase began.
What didn’t work: the speculative fringe
The same period demonstrated, clearly, that directional correctness about a theme does not guarantee investment returns. Cathie Wood’s ARK Innovation ETF was the most prominent example: thematically correct about the direction of technological disruption, but structured around unprofitable, high-valuation companies that could not survive the repricing of risk that occurred when rates rose sharply in 2022. Many of those holdings have not recovered. The lesson is not that innovation themes are wrong — it is that vehicle quality and valuation discipline matter at least as much as thematic direction.
The Next Decade: Where Structural Change Is Heading
The next phase of technology-driven change is different in character from the last. The 2020–2025 period was primarily digital — software, platforms, AI capability, cloud. What’s coming is the translation of those digital capabilities into the physical world: manufacturing, energy, transport, healthcare, and agriculture. The infrastructure being built today is the enabling layer for physical-world transformation over the next decade.
| Trend | What’s Driving It | Investment Implication |
|---|---|---|
| AI-powered robotics | Labour shortages, falling hardware costs, and improved AI reasoning capabilities enabling deployment in unstructured environments | Exposure spans industrial automation, healthcare robotics, and agricultural technology — not a single sector |
| Energy grid modernisation | Electrification of transport and industry, renewable intermittency requiring grid management, AI data centre power demand | Grid infrastructure, power management software, and small modular reactor development; multi-decade investment cycle |
| Autonomous transport | Convergence of AI capability, sensor cost reduction, and regulatory progress; commercial trucking leading consumer vehicles | Still early-stage for most applications; concentration risk is high in pure-play vehicles |
| Personalised medicine | Genomic sequencing costs, AI-assisted drug discovery, and wearable diagnostics generating usable clinical data at scale | Long development cycles and binary approval risk require diversified exposure; single-stock risk is significant |
| Commercial space | Reusable rocket economics dramatically reducing launch costs; satellite constellations enabling new connectivity and data layers | Infrastructure and enabling services more predictable than exploration; still a small addressable market near-term |
| Cybersecurity | AI-generated attack vectors, state-sponsored threats, and regulatory mandates creating a structural demand floor | One of the more predictable secular growth areas; demand is non-discretionary and grows with digitisation |
A few important qualifications. First, the timeline for physical-world transformation is longer and less linear than the digital phase. Regulatory friction, infrastructure requirements, and the complexity of operating in physical environments mean that adoption curves are slower. Second, the winners within each theme are not obvious in advance — the companies that capture the most value from, say, AI-powered robotics may not be the pure-play robotics manufacturers; they may be the software firms managing the workflow, or the sensor suppliers, or the insurance companies that enable deployment at scale. Third, all of this is already known by markets. A structural trend that is widely understood is not, by definition, an unrecognised opportunity — it is priced. The question is whether the growth is under- or overpriced, and at what point in the adoption cycle you are entering.
A Case Study in Thematic Conviction: The Granny Shots ETF
Tom Lee is one of the more credible voices in US equity strategy. He spent years as Head of US Equity Strategy at JP Morgan — a role that does not go to people who are not exceptional at what they do — and has built a strong long-term track record through Fundstrat, his independent research firm. His approach is worth examining not because it should be replicated wholesale, but because of what it illustrates about how to think about thematic conviction.
The name comes from basketball. A granny shot — an underhand free throw — is statistically more accurate than the conventional overhead technique, but almost no professional players use it because it looks unconventional. The analogy is to investment ideas that have strong probability of working over time but that are ignored or underweighted because they don’t fit the prevailing narrative. Lee’s thesis is that high-conviction, fundamentally-grounded positions in dominant businesses aligned with secular growth themes will outperform a market that is either ignoring them or treating them as tactical trades.
The GRNY ETF (Fundstrat Granny Shots US Large Cap ETF), launched in late 2024, has grown to approximately USD 4.5 billion in assets under management as at June 2026 — a significant scale for a fund of this vintage. More relevantly, the performance numbers are worth examining:
| Period (as at 31 May 2026) | GRNY (NAV) | S&P 500 |
|---|---|---|
| 1 Month | 3.61% | 5.26% |
| 3 Months | 10.61% | 10.52% |
| 6 Months | 10.83% | 11.34% |
| Year to Date | 11.59% | 11.27% |
| Since Inception | 38.12% | 30.43% |
Since inception, GRNY has outperformed the S&P 500 by approximately 7.7 percentage points — a meaningful margin over roughly 18 months. The recent shorter periods show more mixed results, with the ETF slightly behind the index on a one-month and six-month basis, and slightly ahead year-to-date. This is roughly what you’d expect from an active, thematically-driven strategy: performance that diverges from the index at shorter intervals but aims to compound an advantage over the full cycle.
The current top holdings — Oracle, ServiceNow, Arista Networks, Cadence Design Systems, and AMD — reflect a consistent logic: companies that are supplying the infrastructure layer (compute, networking, EDA tools, database and workflow software) for AI adoption, rather than speculative bets on AI applications that may or may not scale. These are large, profitable businesses with real revenue growth, not concept stocks.
What distinguishes this from ARK-style thematic investing is the quality filter. ARK’s holdings were often pre-revenue or early-stage businesses where the investment thesis was entirely dependent on a multi-year adoption curve materialising as projected. GRNY’s holdings are largely profitable, cash-generative businesses that happen to be aligned with structural growth themes. The downside scenario is contained in a way that pure-play speculative thematic vehicles are not.
It is worth being clear that GRNY is a US-listed ETF and is not directly accessible on South African LISP platforms. It is mentioned here as an illustration of a coherent approach to thematic investing — not as a specific recommendation. SA-based investors with offshore capacity can access US-listed ETFs through forex-enabled brokerage accounts, but the appropriate vehicle for a given client depends on their overall structure, tax position, and offshore allocation framework.
How Thematic Allocations Fit a Real Portfolio
The most common mistake with thematic investing is not the choice of theme — it is the sizing. A portfolio that is 40% allocated to a single sector or theme is not a diversified portfolio with a thematic tilt; it is a concentrated bet that happens to contain some other positions. The return profile will be dominated by the concentrated exposure, and the diversification that protects against unexpected outcomes will be largely absent.
The more useful mental model is to think about thematic allocations as satellite positions within a properly structured core. The core — diversified across geographies, asset classes, and return drivers — provides the resilience that allows the satellite positions to take on more directional risk. The satellite provides the opportunity for the portfolio to do materially better than the market over time, if the structural thesis plays out.
| Approach | What It Provides | Risk to Manage | Sizing Guidance |
|---|---|---|---|
| Broad global equity (passive) | Market return, diversification, low cost | Full market exposure including overvalued segments | Core holding — typically 40–60% of equity sleeve |
| Active global equity | Potential for alpha through manager skill and conviction | Manager risk, fee drag if performance doesn’t justify cost | Complementary core — 20–30% of equity sleeve |
| Thematic / sector ETF | Concentrated exposure to a structural trend | Concentration risk, valuation risk, theme timing | Satellite — typically 5–15% of total portfolio |
| Individual thematic stocks | Maximum conviction, no fee drag | Single-stock risk, requires ongoing research capacity | Satellite — only where conviction and research depth support it |
There are several ways to get thematic exposure in practice, and the right approach depends on where you are in the investment journey, what your offshore allocation allows, and what your fee structure looks like overall:
Thematic ETFs provide diversified exposure within a theme at relatively low cost. A global robotics and automation ETF, a cybersecurity ETF, or a clean energy infrastructure ETF gives you exposure to a structural trend without the binary risk of a single stock. The trade-off is that even the best themes contain companies of very different quality, and a theme-level ETF will hold some of both.
Active global funds with thematic tilts — many of the better active managers run concentrated, conviction-driven portfolios that naturally end up with meaningful tech or innovation exposure as a consequence of their quality filters, rather than as a deliberate thematic overlay. This can be a more organic and risk-managed way to get thematic exposure than buying a dedicated sector fund.
Direct offshore positions for clients with meaningful offshore allocations and the appetite for ongoing monitoring. A position in a company like Arista Networks or ServiceNow reflects a structural view on AI infrastructure, but the return profile depends on company-specific execution as much as the theme itself.
SA-domiciled funds with tech exposure — locally-available options are more limited, but some actively managed global equity funds available on SA platforms carry meaningful AI and technology exposure as part of their broader mandate. For clients without offshore capacity or for retirement vehicle holdings, these can provide partial thematic exposure without requiring a separate allocation.
The honest constraint is that South Africa’s fund landscape does not offer the same breadth of thematic vehicles that US or European investors have access to. LISP platforms carry a fraction of the thematic ETF universe available on US exchanges, and the few dedicated technology or innovation funds available locally tend to be more expensive and less precise in their exposure. This is worth acknowledging rather than pretending the options are equivalent.
The South African Context
For South African investors, the relevance of global technology trends is primarily felt through portfolio construction rather than domestic market exposure. The JSE has negligible direct exposure to the themes described in this piece — Naspers and Prosus provide indirect global tech exposure through their Tencent holding, but that is a concentrated, single-company bet rather than a structural technology allocation.
This matters because the case for offshore diversification has never been purely about currency protection or rand weakness, although those remain real considerations. It is also about gaining access to the industries and companies driving structural economic change — the ones that simply do not exist in sufficient depth or diversity on the JSE. An SA-only portfolio is, structurally, a portfolio without meaningful technology exposure. That was less consequential in 2010 than it is in 2026.
For investors with offshore allowances — whether through discretionary investment portfolios, retirement annuity structures with global equity allocations, or direct offshore investments — the question is not whether to have global technology exposure, but how to structure it sensibly. That means calibrating the size of the allocation to the overall portfolio, selecting vehicles that match the quality of the underlying businesses to the quality of the theme, and being honest about whether a given allocation is a considered structural view or simply chasing recent performance.
For clients in living annuities, it is worth noting that Regulation 28 does not apply post-retirement — full offshore flexibility exists within the portfolio. For those still accumulating in RAs or pension funds, the current Regulation 28 offshore limit of 45% (including Africa) provides meaningful scope for global equity exposure, though the specific vehicles available depend on the product platform.
Frequently Asked Questions
What is thematic investing and how is it different from buying index funds?
Thematic investing allocates capital to specific structural trends — such as artificial intelligence, energy grid modernisation, or robotics — rather than tracking a broad market index. An index fund holds all companies in proportion to their size; a thematic fund holds only companies aligned with a particular trend. This creates more concentrated, higher-conviction exposure with the potential for outperformance if the theme plays out, but also more concentrated risk if the theme underperforms or is overvalued at entry.
What is the Granny Shots ETF and can South African investors access it?
GRNY is the Fundstrat Granny Shots US Large Cap ETF, an active ETF managed by Fundstrat Capital and launched in late 2024. It has grown to approximately USD 4.5 billion in assets under management and has outperformed the S&P 500 since inception by roughly 7–8 percentage points. It is a US-listed ETF and is not directly available on South African LISP platforms. SA investors with forex-enabled offshore brokerage accounts can in principle access it, but the appropriate vehicle depends on each investor's overall structure and tax position.
What percentage of my portfolio should be in thematic investments?
There is no universal answer, but thematic allocations are typically treated as satellite positions — a smaller, higher-conviction portion of the overall portfolio alongside a diversified core. Most prudent frameworks suggest keeping dedicated thematic exposure below 15–20% of the total portfolio, with individual thematic positions smaller still. The key discipline is sizing: a thematic view that turns out to be directionally correct can still produce poor investment outcomes if the allocation is too large and entered at a high valuation.
How does South Africa compare when it comes to technology investment options?
The SA landscape is more limited than US or European markets, but a few options exist. For broader tech exposure, the Satrix Nasdaq 100 ETF tracks the 100 largest non-financial companies on the Nasdaq and is accessible on most LISP platforms — it is a broad index, not a pure-play thematic fund, but carries significant technology weighting. For more concentrated thematic exposure, Sygnia offers the FANG.AI Actively Managed ETF (SYFANG) and a unit trust equivalent, both benchmarked to the NYSE FANG+ Index and focused on AI, large language models, cloud, and e-commerce. Sygnia also runs a 4th Industrial Revolution ETF (SYG4IR) covering robotics, cybersecurity, autonomous vehicles, and related themes. Beyond these, options thin out quickly — most other technology exposure in SA comes as an incidental tilt within broader active global equity mandates rather than as a dedicated allocation. Naspers and Prosus provide indirect access to Chinese internet growth via Tencent, but that is a concentrated single-position bet rather than diversified thematic coverage. For clients with offshore capacity, the range of purpose-built thematic vehicles available on US exchanges is substantially wider.
ARK Innovation has recovered recently — does that change the lesson about thematic investing?
ARK Innovation (ARKK) did return approximately 35% in 2025, outperforming the S&P 500 that year, and the broader ARK fund range averaged close to 40% — so the recovery is real. But the 5-year annualised return remains around -8% per annum, because the 2022 collapse was so severe that even two strong recovery years haven't repaired the damage on a compounded basis. A 61% drawdown requires a 158% gain just to break even — that arithmetic is unforgiving. The lesson isn't that ARK's themes were wrong; it's that entering a high-conviction thematic vehicle at peak valuation, with a portfolio weighted toward pre-profitability companies, produces poor outcomes over a full cycle even when the directional view ultimately proves correct. Timing, entry valuation, and underlying business quality all matter — not just the theme.
What This Means for How You Invest
The structural changes underway in artificial intelligence, energy infrastructure, and physical-world automation are real and consequential. They will shape which businesses compound value over the next decade and which ones don’t. That much, we think, is reasonably clear.
What is less clear — and where the discipline of portfolio construction matters most — is how to gain exposure to these trends without falling into the traps that have consistently derailed investors who tried to do the same thing in previous cycles. Those traps are: overpaying for a correct thesis, concentrating too heavily in a single theme, and confusing a compelling story with a sound investment.
The answer is not to ignore structural trends. It is to incorporate them thoughtfully — as satellite allocations within a diversified core, through vehicles that maintain quality standards, and at sizes that reflect the inherent uncertainty about which specific companies or themes will capture the most value. The future is directionally visible. The specific path it takes rarely is.
If you want to review how your current portfolio is positioned relative to these structural shifts — including whether your offshore allocation is appropriate and how any thematic exposure is being sized — that is a conversation we’re happy to have. You can read more about how we approach portfolio construction here.
If you’re reviewing how your portfolio is positioned relative to structural technology trends
— or want to think through whether thematic exposure makes sense within your overall
allocation — we’re happy to work through it. It’s a planning conversation, not a product pitch.
For more on the kinds of clients we work with, take a look here.
This article is for informational purposes only and does not constitute financial advice.
Henceforward (Pty) Limited is an authorised representative of Graviton Wealth Management
(FSP 8772). References to market events and historical performance are for illustrative
purposes only and are not indicative of future results. Projections and illustrations are
for discussion purposes only. References to specific funds or ETFs are for illustrative
purposes and do not constitute a recommendation to buy or sell any security. Consult a
qualified financial advisor before making any investment decisions.