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Tips for trend and thematic investing in 2023


Get armed and educated to invest in 2023 with top tips from an eToro market analyst.

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The beginning of a new year is an ideal time to review your portfolio, look at potential gaps and assess your strategy for the year ahead.

But what are some of the major upcoming trends for 2023? Which sectors should investors be keeping an eye on?

To find out more, we spoke to Josh Gilbert, market analyst at eToro Australia.

Trend #1: A potential bull market

It's early days, but 2023 looks to be set up for lower inflation and lower interest rates. The global economy is cooling, but volatility remains.

With the RBA also expected to cut rates in the second half of 2023, Gilbert is optimistic about this combination of factors.

"Forward-looking investors will see this mix as the footsteps for the next bull market," says Gilbert. "I think we can start to look less defensive as inflation does begin to fall."

This presents opportunities for investors who are looking at diversifying their portfolios.

📈Trader tip! There are benefits to buying or selling during both bull and bear markets. Experienced traders will generally have a diversified portfolio so that they can maximise their returns during one type of market, while being insulated against the negative effects of another.

Trend #2: Diversification via platform-based baskets

There are many advantages to a diversified portfolio – insulation against market shifts, risk balancing and potentially more reliable returns, to name a few.

So if you're looking to branch out this year, one way you can easily diversify into new markets is via ETFs and platform-based baskets – for example, like eToro Smart Portfolios.

There are potential capital gains advantages in baskets as the fund/portfolio will rebalance – rather than you needing to realise individual stock gains. Just make sure you speak to your accountant first, to see if it suits your risk profile.

Baskets are also often themed around a particular sector or investment strategy.

"To give some eToro examples, this theme could be based on a growing market trend, such as clean energy or gaming; a new technology, such as semiconductors, Decentralised Finance (DeFi) or the metaverse; assets from a specific region, such as Europe or China; as well as more traditional industries such as healthcare, banking or oil," says Gilbert.

In practical terms, this means investors can enjoy a wide variety of assets – in some cases, maybe some they haven't thought about or explored before.

"Although the assets have a theme in common, they can span varied sub-sectors, regions, and even different asset classes," says Gilbert.

Gilbert also notes that when you're choosing a new platform, there are a few key features to consider:

  • Management/success fees
  • Asset breakdown of portfolio
  • Which markets it provides access to
  • Customisability
  • Past performance – though always remember, it's no guarantee of future success.

📈Trader tip! There are many different trading platforms to choose from, each with their own unique strengths. However, many offer practice accounts. This can be a great way to get a feel for whether a platform suits your needs before you invest any real money.

Trend #3: Utilities and clean energy

Given the push to stamp out combustion engines by 2030, renewable energy is an investment theme that continues to capture investors' attention.

This clearly shows that investors are adopting a long term mindset," says Gilbert. "We may not see some of the renewable energy stocks really come to fruition for many years, but these trends aren't short term and will likely be a big part of investors lives for many years."

The eToro analyst also notes that clean energy investment topped out at around $1.4 trillion in 2022 – a staggering three-quarters of the growth in overall energy investment.

"This is one of the themes that investors are most confident in, with 45% saying they expect clean energy to be the best investment theme in 2023."

With the rise in traditional energy prices, spending has also been underpinned by financial support from governments.

Gilbert points to the geopolitical tensions between Russia and Ukraine as a notable factor driving energy price rises. Yet he also sees it primarily as a short-term problem.

"It's a big pain for consumers – but the upside is that the supply shortages are also leading to renewed investment in renewable energy."

📈Trader tip! Although there's a lot of buzz around clean energy investment, Gilbert cautions against overlooking "classic" investment sectors, too. "We don't want to overlook old-world sectors such as banking and oil," says Gilbert. "They are 2 of the cheapest sectors and are still benefiting from decade-high interest rates and high oil prices."

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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage come with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
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