How the Advent of Molecular Medicine Exemplifies the Power of Thematic Investing

In this interview, Thematic Research Analyst Garrett Collier explains how the theme demonstrates Chevy Chase Trust’s long-term, cross-sector approach to investing.

What is the Advent of Molecular Medicine, and why has it been such a long-standing theme for Chevy Chase Trust?

At its core, the Advent of Molecular Medicine is about using genomic sequencing to better understand human disease and develop more precise, targeted treatments. It’s one of our oldest themes because the underlying science continues to evolve and create new investment opportunities. Over time, it’s created what we call a flywheel effect. More sequencing drives better understanding of disease, which drives better diagnostics and therapies, which drives even more sequencing. This cycle continues to generate meaningful investment opportunities.

How does this theme reflect CCT’s Global Thematic Investing approach?

Molecular Medicine illustrates the way we think across sectors. The theme began with genomic sequencing and the companies making the machines that enabled this work. But as the science evolved, so did the opportunities, from diagnostics to drug development to advanced computing. It’s a great example of how following a single theme over time can lead to investments that span healthcare, technology and beyond. This cross-sector lens is a defining part of how we invest.

What sets your investment process apart when tracking themes like Molecular Medicine?

We’re not just reacting to headlines — we’re immersed in the science and in direct dialogue with the companies doing the work. We follow the evolution of a theme over time, which positions us to find opportunities early. A lot of our work is about thinking several steps ahead. For example, if genomic sequencing is taking off, what tools and infrastructure are going to be critical to support it? What technologies enable better and cheaper sequencing and what companies will benefit from these improvements? This long-term, fundamentals-driven perspective helps us identify promising companies early.

What role does rigorous research play in managing risk within this theme?

While innovation in healthcare is often exciting, not all of it is investable. We always ask fundamental questions: Is there a market for this? Is there a real business model behind the innovation? You can have the most exciting tech, but if it’s too costly to implement, it’s not going to work as an investment. So, it’s about marrying optimism on innovation with disciplined analysis — a sober approach that’s grounded in fundamental research. And by digging deep, we can separate the promising technologies from the interesting ideas that may not be investable.

How does your team identify cross-sector connections and translate them into investable ideas?

Themes like Molecular Medicine often generate ripple effects. As we dive deep, we sometimes uncover adjacent opportunities. For example, once you understand how critical data analysis is to genomic science, you start asking what technologies enable that. We started hearing researchers say they needed Graphics Processing Unit (GPU) technology — not Central Processing Unit (CPU) technology — to process the vast quantities of genomic data and realized that demand for high-performance computing would extend far beyond health care. That led us to invest in companies making GPUs well before ChatGPT became a common topic at the dinner table. It’s a textbook example of how following one theme closely can reveal opportunities in entirely different industries – an approach that is central to our thematic strategy.

You mentioned earlier the “Flywheel Effect” you see in Molecular Medicine. Can you share a specific example of this in action?

One example is cancer screening and detection using blood tests that detect tumor DNA. If you’ve been treated for cancer, these non-invasive tests can help detect recurrence by simply analyzing your blood. That’s possible from years of advancements in genomic research. And the more these tests are used, the more data they generate, which improves future diagnostic tests and drives further demand for sequencing.

How has the Molecular Medicine theme evolved since its inception?

It started with research-driven demand — sequencing DNA to understand it better. Then came targeted therapies, like gene and cell therapies. Some of those have been slower to play out, but others have led to real breakthroughs. Now we’re seeing widespread clinical applications — tumor profiling, noninvasive prenatal testing, early disease detection. What began as a research tool is now part of everyday patient care, helping to improve and save lives.

What are the most exciting emerging applications of Molecular Medicine you’re tracking right now?

AI is a transformative force in Molecular Medicine. DNA has billions of data points, and AI can help identify correlations humans might miss. That’s valuable in drug discovery and diagnostics. Companies that build massive data sets can harness the insights of improving AI models to differentiate themselves from competitors. As AI models require more data, sequencing demand should continue to grow, creating tailwinds to drive the theme forward.