Prevalent Investment Trends to Observe in 2023

The more seasoned investors approach the market with a long-term perspective, using short- and medium-term volatility to invest in long-term themes.

FREMONT, CA: Most of the time, seasoned investors approach the markets with a long-term perspective, utilizing short- and medium-term volatility to invest in themes they feel will bear fruit over many years. Despite the difficulty of spotting these trends, shutting out the noise can show what's to come, which could result in huge rewards.

Let's ring in the new year by taking a look at various themes that indicate considerable growth potential in 2023 and beyond, focusing on the top investment trends right now:

Artificial intelligence: The technological revolution has propelled artificial intelligence (AI) to the forefront of civilization, turning what was once simply a concept into a reality. With AI upending numerous facets of our life, the burgeoning business could become the most impactful of the century.

International Data Corporation (IDC), a source of market intelligence, forecasts that by 2024, global AI industry revenues will surpass $500 billion, growing at an annual compound rate of 17.5 percent over the next five years.

Fundamentally, AI seeks to imitate human intellect with greater precision and speed. As computers and machines become more clever, AI becomes increasingly potent, with its applications and uses affecting practically every industry.

Consider DALL-E 2, an AI system that employs machine learning algorithms to generate realistic visuals and art from words, or ChatGPT, an advanced chatbot capable of writing human-like prose in seconds.

Whether it is autonomous vehicles, Robo-advisors, or researchers utilizing AI for drug development, the technology is now pervasive.

For instance, Exchange-traded funds (ETFs) give most ordinary investors a simple and economical option to invest in AI stocks. Here are three to think about: Global X Robotics & Artificial Intelligence ETF (BOTZ), ARK Autonomous Technology & Robotics ETF (ARKQ), and ROBO Global Robotics and Automation Index ETF (ROBO).

Augmentation of interest rates: The Federal Reserve has expanded interest rates to their highest level since 2007 to combat inflation. Additional rate hikes could follow.

Historically, specific economic sectors have performed well in an environment of rising interest rates. As a result of charging higher interest rates on loans, even a little increase in interest rates can generate billions of dollars in interest income for financial institutions.

Another group that frequently gains is cash-rich, low-debt corporations. These firms earn greater returns on their cash reserves as yields climb. Technology and healthcare companies often have the largest cash reserves among the S&P 500, as many hoard cash for strategic acquisitions and other development possibilities. Stock prices of even the most prominent companies plummeted in 2022 as the Federal Reserve tightened monetary policy.

Consider ETFs such as the Financial Select Sector SPDR Fund (XLF), Health Care Select Sector SPDR Fund (XLV), and Technology Select Sector SPDR Fund (XLK) if you are seeking exposure to these industries (XLK).

In addition to equities, bond market returns are closely associated with interest rates. And investors can profit from this tendency through various investment techniques, such as investing in short-term fixed-income instruments and reinvesting coupon payments from long-term bonds.

The metaverse: The future of the Internet will feature virtual worlds in which people can engage without physical space limitations. According to industry analysts' projections, these virtual worlds represent the next great investment opportunity.

Tech businesses are establishing digital ecosystems where individuals can shop, play, exercise, learn, and experience most of their daily activities. For instance, Meta (Facebook) intends to spend billions developing the metaverse.

As the number of users of these virtual environments increases, so does the interest of corporations seeking to profit from this trend. Sotheby's, for instance, offers a virtual gallery in the 3D virtual environment Decentraland. Similarly, Nike (NKE) has increased its digital reach by acquiring virtual footwear startup RTFKT.

Microsoft (MSFT) has initiated the $68.7 billion acquisition of Activision Blizzard, the largest gaming deal in history, and a substantial wager on the expansion of the metaverse. The transaction has been subject to extensive regulatory scrutiny from governments worldwide.

For example, analysts identify NVIDIA (NVDA), a semiconductor business that powers computer graphics, as a possible winner from the rise of the metaverse, among other investment options. In addition, Autodesk (ADSK) and Unity Software (U), manufacturers of software that enables architects and designers to build 3D models, as well as cloud-technology provider Fastly (FSLY), are also industry leaders.

For instance, Roundhill Ball Metaverse ETF (METV) invests in a basket of metaverse-related firms for investors seeking broader exposure.