Heading into the new year, now is a good time to look at your investment portfolio and make the changes for the foreseeable future. It is also an opportune time to look at emerging trends and consider how they could impact your investment decisions in the future.
Keep reading as we examine some wealth management trends that we are likely to see in 2023, the outlook of the global financial market, and what investors need to watch for.
Combating inflation
Global economic uncertainty is spurring inflation across the globe. As a result, many investors are shifting their strategies, and those in the UAE are no exception. According to Standard Chartered’s Wealth Expectancy Report 2022, 61% of investors in 14 markets, which includes the UAE, are making changes to their investment strategies. Most cite the threat of recession, an unstable global economy, and inflation as their top reasons.
While some investors report plans to spend less overall to lessen the impact of growing inflation, many are opting to double down and increase their investments to help offset the effect. This trend will likely be more popular among high-net-worth individuals. Around 70% of individuals within this category are more likely to be actively managing and adjusting their investments, compared to just 63% of emerging affluent individuals.
Cash will take a step down
To stay ahead of inflation, many investors around the world are also opting to reduce their cash holdings. More than 71% of investors in the UAE reported that they had already, or planned to, reduce their cash holdings in the coming year. This is not an entirely new trend, but one that investors should keep in mind when evaluating their portfolios ahead of the new year. Globally, it is expected that cash allocations for investments will fall 15% in 2023, down slightly from a 23% drop in 2022.
Digital assets remain popular
Despite ongoing market volatility and uncertainty in recent years, it seems likely that interest in digital asset investments will continue into 2023. More than 60% of respondents in the Wealth Expectancy Report by Standard Chartered reported that they believed that digital assets are a key component of any investment portfolio, while 50% said that they plan to invest in digital assets of some kind in the coming year.
On the opposite end of the spectrum, investments in gold, a far more traditional option, have increased to combat inflation. Around 37% of individuals reported plans to invest in or increase their investments in gold in the coming months.
Sustainability investments on the rise in the UAE
One important trend to keep in mind is a continued interest in sustainability investments. Growing awareness and demand for sustainability innovations are driving investors to increase exposure to related assets. Sustainability often ranks near the top as far as current investor interests are concerned. In fact, about 52% of investors reported that they planned to increase their investments in sustainability companies and solutions in 2023.
In addition to being a trend that is likely to continue into the future, sustainability may also be a recession-proof investment. As a result of research and an increasing belief that we need to implement sustainability measures today to protect our world, related investments are likely to remain strong even if a global recession does occur.
From an increase in investments and a step back from cash allotments to a response to growing inflation to an ongoing interest in digital assets and sustainability investments, these are a few trends that we expect to see in 2023. Keeping an eye on these trends in the coming months and adjusting your investment strategies can help you stay ahead of uncertainties, growing inflation, and the threat of a recession.
https://av.sc.com/corp-en/content/docs/Wealth-Expectancy-Report-2022_SC.pdf
