Adjusting investor decisions in new era
We bring you our assessment of the key themes for wealth and investment markets in 2023.
2 minutes to read
Using data from our annual Attitudes Survey of more than 500 private bankers, wealth advisors and family offices combined with in-depth conversations with industry experts, we take a look at how the investment landscape is shaping up for 2023.
Four in ten ultra-high-net-worth individuals grew their wealth during 2022, despite a year of ‘Permacrisis’.
Every time lexicographers choose their ‘word of the year’ they provide a signal as to how the world is changing. This year, Collins English Dictionary chose ‘Permacrisis’, defined as an “extended period of instability and insecurity”.
It’s a fitting choice. The Covid-19 pandemic ended a long period of relative stability. Global economic growth has for more than a decade been underpinned by relatively benign geopolitics, globalisation and the widespread availability of cheap credit.
The triumvirate of shocks that defined 2022 across geopolitics, energy and economics marked a turning point, prompting the majority of equity and bond markets to fall in tandem, culminating in the worst performance for the traditional blended investment portfolio since the 1930s.
Investor opportunities
For many investors it’s been a difficult year, but others have made gains despite the headwinds. Four in ten respondents to our Attitudes Survey said their clients had grown their wealth during the year, while 16% said they’d seen no change.
The drivers of this performance were cited as: real estate, currency trades, market timing, and, for the first time in more than a decade, the return on cash. Indeed, despite significant headwinds annual price growth in prime global residential markets is likely to hit 5% for 2022, according to our November Forecast.
The MSCI All Property Index – an index that measures commercial property performance – was 7% higher in September compared to the end of 2021. We will reveal the full results for 2022 property performance in March.
Traditional portfolios not protected
Those that saw their wealth shrink attributed declines to equity markets, financial markets more broadly and interest rate moves. Many interviewees pointed out that the traditional diversified portfolio offered no safety amid a unique set of circumstances. The MSCI World Mid & Large Cap index was down 18%, the S&P 500 by 19%, the FTSE 250 by 17%, the Nikkei by 9% and China’s CSI 300 22%, by way of example.
Longer term investors have largely been shielded due to declines by the exceptional performance of the preceding years, as pointed out by our panellist David Bailin, CIO at Citi Global Wealth Management Investments. The S&P 500, for example, was up almost 20% between 1st January 2020 and 31st December 2022.
Further insight
We will reveal how the new investing landscape has altered the population of high-net-worth (HNW) and ultra-high-net-worth individuals (UHNWI) in May, once full year data is more readily available.
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