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OFFON

Neelie
Verlinden

Market Analyst
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5 Popular Investment Themes for 2018

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01/30/2018 | 05:16pm CET

Even though the new year is well underway, it’s not too late yet to look at some popular investment trends for 2018. What’s going to be hot this year and what’s not?





1. Aging

This one shouldn’t come as a surprise. The baby-boomers have been retiring for a while now and this is something that will continue to happen at an even faster pace.


But was does this have to do with investment trends you wonder? Let me elaborate.

For starters, the gap that the retirement of baby-boomers leaves will have a considerable impact on the labor market and create a shortage of workers. In order to (partially) try and fill this gap, companies will increase their investments in workplace automation and technology.

Secondly, people are living longer and getting older than ever before. This will have consequences for the healthcare sector globally, but especially in emerging markets, since they often haven’t really invested in a well-structured healthcare system before.

In order to meet the growing demand, investments in products, services, and technologies tailored to the needs of an aging population are likely to go up.

Related: Amazon, Berkshire, JPM form healthcare company to cut costs.


2. Millennials

Now, there is a lot to say about this trend. In fact, the topic of millennials and the potential impact they could have on how investment is done probably deserves an article on its own. So we’ll keep it short for now.

Millennials – the generation born somewhere between the early 80’s and the mid 90’s/2000, also known as Generation Y – are about to inherit a massive chunk of wealth from...  indeed, the baby-boomers.

As such, they’ll become an important – perhaps the most important – group of investors which means that it’s time to know what type of investments they’re interested in.

Interestingly, the elements that tend to matter to millennials when it comes to making an investment decision are the same factors that play a role when they choose a job: sustainability, purpose (i.e. a positive environmental and social impact), and passion.   


3. Automation, Robotics & AI

This is another trend that shouldn’t come as a surprise. Applications of artificial intelligence (AI) and automation are all around us. Think of Netflix using an AI-powered algorithm to tell you what show you might like to watch next or Google finishing your sentences when you start to type a question in the search engine for example.

Numerous industries – marketing, sales, finance, and HR, to name a few – already use AI technology to optimize and/or automate their processes. Further automation is only a matter of time.


4. China

Or Chinese middle-class consumers, to be exact. China’s economy is becoming more and more consumer-driven and, to stick with the millennials example, the wealth of Chinese millennials alone is expected to be somewhere between $19 trillion and $24 trillion between now and 2020.     

Needless to say, these kind of figures are clearly something to take into account. Especially since this group has a big influence on family purchases and often also has a significantly higher (gross) income than their parents. The same thing goes for millennials in India and other Asian countries by the way (see the illustration below). 



5. Sustainable investing

As demographics are changing and more women (as well as, again, millennials) are investing, the focus shifts to more sustainable investments.

This means, among other things, that investors take a closer look at elements such as the use of resources, employee treatment & retention rates and the way management runs the company (is the management long-term oriented or not for instance). The figure below shows the evolution of sustainable investing in the United States over the past decade.


Environmental, Social and Corporate Governance (ESG) growth in the US since 2005.


Other trends

Of course, these five investment trends aren’t all that’s on the investment menu for 2018. Other themes that regularly pop up are the revival of the Eurozone, the strength of the banking industry and power providers for instance.

Sources:
https://www.gam.com/en/insights-content/2018/investment-opinions/2018-outlook-themes/
http://uk.businessinsider.com/head-of-investment-themes-ubs-on-global-trends-investors-should-know-2017-9
http://www.schroders.com/en/uk/private-investor/insights/markets/the-rise-of-young-asia-how-millennials-are-transforming-a-region/


Neelie Verlinden
© 4-traders.com 2018
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