Core Insights - Thematic ETFs have shown strong momentum in early 2026, adding $4 billion in January after a $23 billion increase in 2025 [1] - The VettaFi Thematic Rotation Index provides a disciplined approach to thematic investing, addressing challenges like timing and overlapping exposures [1] Thematic Investment Strategy - VettaFi's index encompasses a multi-sector approach, including trends in energy, financials, materials, and healthcare, beyond just technology [1] - The index is rebalanced quarterly, employing an equal-weighting strategy and capping individual company exposure at 8% to mitigate concentration risk [1] Sector Performance - The late December rebalance identified seven dominant sub-themes: Uranium, Semiconductors, Quantum Computing, GLP-1 Weight Loss Drug Manufacturers, E-Sports & Interactive Gaming, Defense, and Consumer Fintech [1] - Previously popular themes like Cloud Computing and Travel & Leisure have seen a decline in momentum [1] Benchmark Overlap and Returns - The VettaFi index has a low overlap with major benchmarks, at 21% with the S&P 500 and 23% with the Nasdaq 100, including 185 companies with a median market capitalization of $18 billion [1] - The index achieved a 24% return over the 12 months ending January 2026, outperforming the Nasdaq 100 (20%) and S&P 500 (16%) [1] Geographic Diversification - The index primarily focuses on the U.S. market (60%) but also includes companies from Australia, Canada, China, Denmark, and Japan, providing necessary cross-border diversification [1]

Core Insights - The article discusses 15 stocks anticipated to experience significant growth by 2026, amidst a capital rotation towards growth leaders outside of Big Tech as AI spending is projected to reach $500 billion by 2026 [2][4]. Industry Trends - AI spending is expected to reach $500 billion by 2026, with traditional industries such as power infrastructure and construction gaining investor interest due to their role in supporting AI expansion [2]. - Investment in AI encompasses not only technology like GPUs and chips but also infrastructure such as HVAC, IT, and power grids, indicating a broad impact across various sectors including industrials, materials, and financials [2]. Market Outlook - A cautious outlook for 2026 has been expressed, predicting "sticky yields" and a potential shift in Federal Reserve policy towards rate cuts, which may lead to subdued equity momentum [3]. - The sentiment around an AI bubble persists, with industry leaders acknowledging its presence and potential longevity [4]. Stock Selection Methodology - The list of 15 stocks was curated by screening U.S.-listed companies with a market capitalization over $2 billion and a potential upside exceeding 50% as of November 4, 2025, ensuring significant analyst coverage and hedge fund interest [6]. - The strategy of selecting stocks favored by hedge funds is based on research indicating that mimicking top hedge fund picks can lead to market outperformance [7]. Company Highlights - **Amicus Therapeutics, Inc. (NASDAQ:FOLD)**: - Hedge fund interest: 40 holders - Upside potential: 73.53% - Reported a 17% revenue increase to $169.1 million in Q3 2025, achieving GAAP net income of $17.3 million, marking a transition to profitability [9][11][12]. - **Summit Therapeutics Inc. (NASDAQ:SMMT)**: - Hedge fund interest: 30 holders - Upside potential: 78.62% - Announced positive results from the Phase III HARMONi trial, showing significant improvement in overall survival for lung cancer patients [13][15][16]. - **Chime Financial, Inc. (NASDAQ:CHYM)**: - Hedge fund interest: 46 holders - Upside potential: 83.37% - Reported a 29% year-over-year revenue increase to $544 million in Q3 2025, with significant growth in platform-related revenue and active members [18][20][22].