In the last two years, BNP Paribas Global Markets has taken an unconventional approach to thematic investing. Through its Theam Quant activity, the bank has launched (via its Asset Management branch) two funds that combine artificial intelligence (AI) with secular trends like healthy living and new energy.
While the bank’s fund journey began in 2006, this strategy marks a turn from traditional approaches, according to Roberto Bartolomei, Head of Alternative and Quantitative Investment Solutions Fund Sales at BNP Paribas.
“The idea is to take strategies we develop for institutional clients and package them into accessible funds,” he says. “This approach allows us to reach an entirely different market.”
The funds’ edge lies in their use of AI for stock selection. While human oversight ensures proper structuring, machine learning helps identify companies and analyse their alignment with themes – considering everything from technology investments to financial viability.
This has led to some unexpected results. Vincent Berard, Head of Product Strategy for the THEAM Quant funds range, points to the AI’s suggestion of Ford for the New Energy strategy, back in 2023.
“At the time, Ford had ambitious targets to ramp up EV production,” he explains. “The model picked this up, which makes sense because a rapid energy transition in the transportation sector requires competition by major car companies to drive prices down. However, following changes in the company’s strategy during 2024, turning more attention to hybrids, both the AI and the analysts’ scores were downgraded, and the model currently does not select the stock.”
Unlike many thematic funds that concentrate holdings in obvious players, Theam’s approach enforces strict diversification. No single stock can exceed 3%, while sectoral and geographical allocation limits may also apply.
The New Energy Opportunities Fund, for instance, looks beyond pure-play renewables. “This is not a renewable energy strategy. It considers the entire ecosystem,” says Berard. “We can leverage not only the Exane analysts’ insight into individual companies, but also on their knowledge of the wider industry.”
Early results show promise. The Healthy Living strategy has outperformed the MSCI World Health Care Index by 3%, showcasing diversification benefits. Meanwhile, the year-old New Energy Opportunities Fund has surpassed the iShares Clean Energy Fund by more than 20% – notable given recent struggles in clean energy stocks.
BNP Paribas sees these funds as the beginning of a broader range focused on key “meta” investment themes. Given the results so far, expansion appears likely.
While mega-funds continue to dominate hedge fund flows and startup numbers decline, a quiet revolution is taking place in the industry’s margins. Investors are increasingly hunting specialised managers who can fill precise portfolio gaps – from employee wellness to sustainable living.
These emerging niche strategies aren’t just surviving in the shadow of multi-strategy giants; they’re thriving by targeting unexploited market inefficiencies and emerging secular trends. The series would explore how these specialised funds are carving out their space in an industry typically associated with scale, examining their unique value propositions, challenges and the investors backing their vision.
