03 January 2024
While the Internet is a hive of activity and a honey pot for research, investment trends are emerging based on search volumes. This is basic statistical information at its best, providing dependable data on emerging trends in the investment world. So, which investment trends should we expect to see in 2024 and beyond?
Those who follow cutting-edge technology related to financial services will not be surprised to see the emergence of the next generation of Robo-advisers. Many people are unaware that the first Robo-adviser was launched in 2008, 15 years ago, based on technology that is now obsolete.
The emergence of quant funds, in tandem with cutting-edge technology, is set to become more noticeable in 2024 and beyond. At this moment, quant assets make up around 29% of the US hedge fund market, a trend developing global traction. Based purely on algorithms and formulas, quant funds are seen by many as a stabilising influence on global markets.
There is a growing difference of opinion regarding ESG investment, with the US accounting for just 11% of ESG fund assets and Europe a staggering 83%. While enhanced returns on ESG investments are attracting interest, there is concern about the regulatory environment and the topic of greenwashing. Will the US come to the rescue of the ESG investment sector?
While "copy-trading" is not a new phenomenon, often referred to as social trading, it is becoming more prevalent, accounting for around 23% of retail trading. Perhaps best demonstrated by the GameStop episode, which saw huge US hedge funds lose hundreds of millions of dollars, this trend appears more potent than ever amongst Generation Z.
As investors become concerned about recent market volatility, there is an increased appetite for alternative investments. These take in private equity, private debt, precious metals, artwork and, more recently, cryptocurrencies. Due to the impact of the Internet, there is now more information available about alternative investments and access to specialised trading platforms.
When you consider that one of the leading fractional real estate investment portfolios in the US, Fundrise, now has more than 387,000 investors in a portfolio valued at a massive $7 billion, this puts it into perspective. Several new fractional investment platforms are emerging, providing private investors with a means of investing in previously unavailable assets.
Ironically, in recent times, we have seen UK investors looking overseas, shunning the local market, which is also happening in the US. One of the more popular markets is Asia, taking in the APAC region, the largest regional economy in the world, and set to become even more influential in the short to medium term. Since 2010, Asia's STOXX Europe 600 index share has increased from 11% to 20% - this says everything.
With some fixed-interest investments posting gains of more than 5% in 2023, it is not a surprise to see growing interest in this area. Whether some investors have left it too late, with the global interest rate cycle set to turn downwards, remains to be seen. Providing stability in challenging times, investment in fixed interest and near cash alternatives is becoming something of a quandary for investors.
Recently, there has been increased interest in crypto assets, focusing on Bitcoin, with some experts forecasting it will reach $100,000 in 2024. While a more encouraging climate is emerging around crypto assets, these are highly volatile and often unpredictable investments. However, could 2024 see crypto assets become a recognised investment class within traditional private investor portfolios?
There is only one certain thing about investment markets: uncertainty, which is something we have seen more than enough of in recent years. We also know that investment markets are quick to adapt to changing environments, as reflected in the nine investment trends listed above, and one day is never the same as the last one. It looks as though we are in for an interesting 2024 and 2025!
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