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AI, robotics, electric cars seen as key investment themes this year
Market remains highly uncertain so investors are advised to be selective.
As market uncertainties persist halfway through 2023, investments in artificial intelligence, robotics and automation as well as electric vehicles will likely provide the quality picks and diversification strategy needed for a resilient portfolio, according to the latest half-year market outlook by Global X ETFs.
The New York-based ETF provider, which is part of South Korea’s Mirae Asset Global Investments, expects the investment climate to remain highly uncertain globally amid a sticky inflation, slowing economic growth and tight labor market.
“Investors should exercise caution and be highly selective when it comes to sector exposure,” said the firm’s chief investment officer, Jon Maier.
Michelle Cluver, senior portfolio strategist at the company, said the three key investment themes they are seeing this year are AI, robotics and mobility, particularly EVs.
“The current market uncertainty emphasizes the need for downside protection, which can be achieved by focusing on large-cap quality stocks,” said Cluver. “Incorporating thematic exposure in the portfolio can (also) offer long-term diversification benefits and provide flexibility during shifts in the market cycle.”
While there is a recent market rally in AI-related equities, he said it is important to note that AI is a “long-term theme with significant staying power,” with the global market expected to expand at a compound annual growth rate of 35.6% and become a $300b industry by 2026 – 10 times its size in 2020.
Automation will continue to play a key role in production processes in terms of boosting efficiency, cutting costs and improving quality as labor costs keep on rising.
The fast-growing EV market is also not showing signs of slowing down as the world ramps up efforts to cut carbon emissions. Cluver said related segments beyond car manufacturing are also poised to benefit from its growth, including EV components, batteries, fuel cells, chemicals, and raw materials, among other things.
