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5 Investment Trends to Watch in 2023

2023-2_5 investment trends CANVA (1)

By Jeff Gilbert

With all the market volatility, rising interest rates, and persistent inflation we saw in 2022, many investors are wondering what they should expect from the markets in 2023 (and beyond). While we can’t predict exactly what will happen, we can share some investment trends that are gaining popularity as part of our collection of financial insights. 

Here are 5 investment trends to watch in 2023 so you don’t get caught unprepared.

Gold

Gold is one of the most traditional investment options out there, especially during times of volatility. Investors flock to gold in times of turmoil because it is seen as a safe haven from the equity markets. Gold also has typically had a negative performance correlation with stocks; as a result, investors see it as an excellent way to provide diversification protection to their portfolio. Gold has traditionally maintained its value over time and is a stable long-term investment. Investors also use gold to help protect their portfolios from the effects of inflation. 

Though gold did not perform as well as expected in 2022, it has a chance to rebound in 2023. Because the volatility of this past year is expected to continue throughout 2023 as many investors worry about a recession, gold could see renewed interest as an investment trend. 

ESG Investments

ESG investing has been gaining popularity over the last several years, and it looks like this trend will continue heading into 2023. ESG investing is a strategy that reviews the environmental, social, and governance practices of a specific company and assesses how those practices might impact the company’s performance in the stock market. ESG aims to examine the total ethical impact of an investment and align investors’ portfolios with their moral values.

It should be no surprise that ESG popularity is driven in large part by younger investors. In fact, nearly 8 in 10 millennial investors rank ESG investing as a top priority in their portfolios and 82% of Gen Z investors already have some exposure to ESG investments.

What’s more, ESG-related investments managed by advisors are projected to grow to $33.9 trillion through 2026, which would outpace the asset management industry as a whole. It’s clear that there is a growing demand for these investments as there has been a corresponding movement in recent years to look beyond just ourselves and consider the impact we’re making on the people and the world around us.

Renewable Energies

Similarly, renewable energy sources like solar, wind, and hydropower are growing investment trends to watch in 2023. As everything from fuel shortages, supply-chain disruptions, rising costs of fossil fuels, and a global climate crisis threatens the traditional ways we produce and consume energy, renewable energies will become essential in the future.

It’s estimated that climate change alone could reduce global economic output by as much as $23 trillion over the next 30 years. As the renewable energy sector continues to grow, this is a trend that investors can take advantage of through alternative-energy ETFs.

Recession-Resistant Industries

With continued rising interest rates and the persistent threat of inflation, there has been constant talk of a looming recession—so much so that according to an October 2022 Wall Street Journal survey, 63% of economists are now forecasting a recession and major job losses sometime in 2023, up from 49% in July.  

This suggests that recession-resistant industries will experience renewed growth in 2023 as investors prepare for the possibility of a sustained economic downturn. Sectors like healthcare, utilities, and consumer staples are typically defensive and do not react as much (or at all) to recession-related volatility. This is because demand for these products and services remain relatively consistent despite economic turmoil. 

Bonds

The overall bond performance in 2022 has not been great. In fact, it could go on record as one of the worst years in history in both the size of the losses (over 16% down) and the range (nearly all bond funds of every type have declined). But the outlook for bonds is improving and the asset class could make a rebound in 2023. For the first time in decades, bond yields are close to what you would expect from stocks. This means there is a potential to make more money in bonds in the upcoming year. 

The current market environment presents an interesting opportunity to buy bonds at significantly discounted prices. Despite the volatility, the outlook for bonds could be more optimistic in 2023. Bond yields and interest rates are up, while prices are down, making greater exposure to bonds an attractive option for many portfolios.

Talk Through These Trends With a Professional

Deciding what to invest in is never as easy as following the latest investment trends. Instead, you should discuss these (and other investment trends) with a skilled financial advisor who understands your unique needs and goals. At Balboa Wealth Partners, we specialize in serving high-net-worth and ultra-high-net-worth families as they navigate their complex planning needs. To get started, give me a call at 949-445-1465 or email me at [email protected]. Or complete a complimentary risk assessment here to learn more about your risk tolerance.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Kingswood Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Kingswood. Neither firm is affiliated.