As a new year begins, it’s important for investors to be aware of the latest trends and developments in the wealth management industry. From the growing popularity of impact investing to the decline of certain investment strategies, there are a variety of trends to watch out for in 2023.
Trend #1 Decentralized Finance (DeFi):
Decentralized finance, or DeFi, refers to financial applications and platforms that operate on blockchain technology. The rise of DeFi has been driven by the growing demand for more transparent, secure, and accessible financial services. In recent years, DeFi has become increasingly popular among investors seeking alternative finance options.
Trend #2 Climate & ESG Investing:
ESG investing is expected to continue its growth trajectory as more and more investors seek to align their values with their investments. With increasing awareness of the importance of sustainability, social responsibility, and good governance, ESG investing has become a popular choice for those looking to make a positive impact on the world while potentially achieving financial returns. As the demand for ESG products and services continues to rise, investment opportunities in this area are likely to expand, offering a range of options for conscious investors.
Trend #3 Healthcare and Biotechnology:
Advances in medical technology and treatments have made healthcare and biotechnology areas of growth and investment opportunity. Digital health has seen the most growth in recent years as widespread adoption of technology in the space has led to increased efficiency, improved patient outcomes and cost savings. Last year, CVS Health acquired Signify Health for a total of $8 billion USD, in a move to enhance connection with consumers.
Trend #4 Cryptocurrency:
Cryptocurrency is expected to see continued growth in 2023 despite a “crypto winter”. As more mainstream investors begin to embrace the digital asset class, experts expect similar outcomes from the last crypto winter in late 2020—a period of incredible growth that lasted for most of 2021. Crypto winters are a lot like conventional bear markets and the results aren’t too dissimilar from bear markets in other asset classes. According to a report by Fidelity, more than half of the institutional investors surveyed globally said they already own digital asset investments.
Some investment strategies, such as high-frequency trading and passive investment, may see a decline in 2023 as investors seek out new and innovative approaches to investing. Traditional energy sources such as coal, oil and natural gas are also expected to see a decline in demand as the world shifts towards cleaner and more sustainable energy sources. According to a report by Reuters, demand for fossil fuels is expected to decline with BP lowering its oil and gas demand forecast in 2035 by 5% and 6% respectively.
Next Generation Investors:
Next-generation investors, including millennials and Generation Z, are influencing the investment landscape with their unique interests and preferences. They are interested in areas such as impact investing, technology, ESG investing, digital assets, and healthcare and biotechnology.
In conclusion, 2023 promises to be a year of new and exciting investment opportunities, particularly in areas such as DeFi, and ESG investing. As always, it’s important to stay informed and up-to-date on the latest developments in the wealth management industry. Additionally, the investment preferences of next-generation investors should not be ignored. It’s crucial to conduct thorough research and consider one’s individual financial circumstances before making investment decisions.
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