The Top 5 Investment Trends to Watch in 2023

The Top 5 Investment Trends to Watch in 2023

January 18, 2023
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The last couple of years have been a roller coaster for investors, and 2023 is on track to be just as interesting. With the current market volatility, persistent inflation, and rising interest rates we’ve seen over this past year, trying to decide which investments to make can be a difficult task. Trying to stay informed on the latest trends can be tricky with things constantly changing and the uncertainty of what the future will bring. While all investments involve some risk, consulting with a financial advisor before making any decisions can help offset some of that risk. To help you navigate the current climate, we’ve compiled these five investment trends to watch in 2023.  

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, a recent survey of investors found that nearly two-thirds of millennial investors have ESG investments. Additionally, 82% of Gen Z investors already have some exposure to ESG investments.

What’s more, ESG-related investments managed by advisors are expected to account for 15% of all investments by 2025, 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 remains 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.

We’re Here to Help

No matter how informed or experienced an investor you are, there’s always an inherent risk. That’s why it’s important to have the right information and guidance as you make decisions. One of the wisest decisions you can make is to partner with a professional who can help you evaluate potential investments transparently and responsibly. 

At Favor Wealth, our team of experienced professionals specializes in creating tailored investment solutions for their clients. To learn more about our services and how we can help you pursue your financial goals, contact us at 626-529-0445 or email Ricky directly at info@favorwealth.com. We look forward to guiding you on your financial journey!

About Ricky

Ricky Biel is founder, wealth manager, and Chartered Retirement Planning Counselorâ„  professional at Favor Wealth, an independent financial advisory firm serving individuals and families near Pasadena, California. Ricky Biel founded Favor Wealth with a desire to provide unbiased, client-centered, community-based financial advice. Ricky and his team of caring, smart professionals want their clients to feel like they’ve done them a favor, making it easier than ever to accomplish their financial goals by blending proven investment methodologies with creative financial technologies. He is on a mission to help his family of clients feel both a sense of relief and excitement about their future. Favor Wealth takes care of its clients’ needs first and foremost and goes the extra mile to make its clients’ finances grow. To meet and see how the Favor Wealth team may be able to help, contact them today at 626-529-0445 or email Ricky directly at info@favorwealth.com

The commentary on this blog/website reflects the personal opinions, viewpoints, and analyses of the Favor Wealth Advisors’ employees providing such comments, and should not be regarded as a description of advisory services provided by Favor Wealth Advisors or performance returns of any Favor Wealth Advisors’ Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Favor Wealth Advisors manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.