Thematic funds surged in popularity in 2025 as investors looked beyond traditional diversification and focused on long-term trends shaping the global economy. Themes such as artificial intelligence, electric mobility, and clean energy drew strong interest as the world accelerated toward automation, electrification, and decarbonization. Global thematic fund assets even climbed to a three-year high of USD 779 billion in Q3 2025, reflecting renewed confidence in innovation-led investing.
This shift also translated into market performance. AI-linked semiconductor ETFs, renewable-energy ETFs, and EV-focused strategies delivered standout returns, reinforcing why investors are increasingly turning to thematic portfolios to capture the next wave of global growth. The iShares Semiconductor ETF (Ticker: SOXX) gained 42% YTD, the iShares Global Clean Energy ETF (Ticker: ICLN) rose 45%, and the KraneShares Electric Vehicles ETF (Ticker: KARS) jumped 48% as capital flowed into the technologies expected to shape the coming decade.
What Are Thematic Funds and How Do They Work
Thematic funds invest in long-term structural trends rather than traditional industry classifications. Instead of focusing on broad sectors like IT or industrials, they build portfolios around niche ideas such as AI, EV adoption, renewable energy, and select companies whose growth is directly tied to these themes.
This structure allows thematic funds to combine businesses across sectors that contribute to the same trend. A semiconductor manufacturer, a cloud-services provider, and an EV battery producer may operate in different industries, yet all benefit from rising AI adoption or the global shift to electric transport. That cross-value-chain approach is what makes thematic ETFs effective for capturing innovation-focused opportunities.
Narrower themes can also deliver sharper upside. In 2025, as global investment in AI infrastructure expanded, semiconductor and AI-focused ETFs outperformed. Similarly, accelerating demand for EVs and renewable energy pushed related thematic funds higher, highlighting how these strategies can benefit when a structural trend gains momentum.
Best Thematic ETF Options Across Three Megatrends
Three dominant themes captured investor attention in 2025: electric vehicles, artificial intelligence, and clean energy. Each offers distinct thematic ETF options with different geographic exposures, concentration levels, and risk profiles. Understanding these differences helps investors select funds aligned with their convictions and portfolio needs.
EV
Electric vehicle adoption accelerated in 2025, with global EV sales reaching 20 million units according to the International Energy Agency. The Global X Autonomous & Electric Vehicles ETF (Ticker: DRIV)gained 31% year-to-date, capturing automakers and their supply chains. KraneShares Electric Vehicles ETF (Ticker: KARS) jumped 49% with deeper Asian market exposure to BYD and CATL. Meanwhile, the Global X Lithium & Battery Tech ETF (Ticker: LIT), which invests across the full lithium and battery supply chain from mining to battery production, posted a strong ~42% YTD return in 2025, mirroring the surging demand for batteries
AI
AI investment accelerated as businesses deployed language models and automation at scale. The Global X Artificial Intelligence & Technology ETF (Ticker: AIQ) provides broad exposure to cloud services and digital infrastructure. For concentrated semiconductor access, the iShares Semiconductor ETF (Ticker: SOXX) and VanEck Semiconductor ETF (Ticker: SMH) hold Nvidia, AMD, and TSMC. These semiconductor thematic funds delivered some of 2025’s strongest returns, returning 42% and 48% respectively, as chip demand from hyperscalers created supply constraints.
Clean Energy
Clean energy’s push toward decarbonization supported renewable growth. The iShares Global Clean Energy ETF (Ticker: ICLN) posted 42% year-to-date gains with diversified solar, wind, and utility exposure. Whereas Global X Renewable Energy Producers ETF (Ticker: RNRG), which focuses narrowly on companies generating renewable energy rather than supplying equipment, returned nearly 30%.
Read more: U.S. Stocks & ETFs Positioned to Ride the Global Energy Shift
Top Global Thematic ETFs for 2025
The table below will summarize key ETFs across EV, AI, and renewable-energy themes, highlighting their focus areas and latest YTD performance to help investors compare thematic exposures effectively.
| ETF Name | Ticker | Theme | 2025 YTD Return | Major Holdings |
| Global X Autonomous & Electric Vehicles ETF | DRIV | EV | 31% | Alphabet, Bloom Energy, Tesla Inc., Intel Corp., Nvidia Corp. |
| KraneShares Electric Vehicles ETF | KARS | EV | 49% | Contemporary A-A, Tesla Inc., Panasonic Holdings Corp., CMOC Group Ltd-A |
| Global X Lithium & Battery Tech ETF | LIT | EV Batteries | 42% | Nvidia Corp, TSMC, Broadcom Inc., Micron Technology Inc., Applied Materials Inc. |
| Global X Artificial Intelligence & Technology ETF | AIQ | AI | 33% | Alphabet, Samsung Electronics, Broadcom Inc., AMD, Tesla Inc. |
| iShares Semiconductor ETF | SOXX | Semiconductors | 42% | AMD, Broadcom Inc., Nvidia Corp., Micron Technology Inc., Applied Materials Inc. |
| VanEck Semiconductor ETF | SMH | Semiconductors | 48% | Nvidia Corp, TSMC, Broadcom Inc., Micron Technology Inc, Applied Materials Inc. |
| iShares Global Clean Energy ETF | ICLN | Clean Energy | 45% | Bloom Energy, First Solar Inc., Iberdrola SA, Nextpower Inc. |
| Global X Renewable Energy Producers ETF | RNRG | Clean Energy | 30% | Axia Energia, Orsted A/S, Barito Renewable, EDP Renovaveis SA |
How Indian Investors Should Approach Thematic Funds
Indian stock indices offer no direct exposure to global semiconductor giants, battery technology leaders, or AI infrastructure manufacturers. Platforms like Appreciate allow Indian investors to buy thematic ETFs fractionally, starting at ₹1, making it accessible to build positions across AI, EV, and clean energy themes.
The best thematic ETF depends on conviction about which trends accelerate fastest and risk tolerance for volatility. Thematic funds work best as satellite allocations, typically 5 to 15% of portfolios, positioned alongside diversified core holdings.
Should You Invest in Thematic Funds
Thematic funds offer targeted ways to participate in global megatrends, but they demand selectivity. EVs, AI, and clean energy present compelling long-term opportunities driven by technological advancement and policy support. Yet they come with concentration risk and cyclical volatility.
For Indian investors, thematic strategies work best as complements to traditional portfolios. They provide access to innovation that domestic markets don’t represent at scale, making thematic funds valuable tools for building globally diversified portfolios.
Disclaimer: Investments in securities markets are subject to market risks. Read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory.
