Investment Trends for 2021: What Can You Expect?

Documents on a wooden surface depicting asset performance through graphs

To say that 2020 has been an unpredictable year would be a massive understatement. With a global pandemic wreaking havoc on the economy and markets becoming increasingly volatile, investors have had to deal with an immense amount of uncertainty throughout the year. The big question now is, how will the pandemic continue to shape the investing world in 2021? Moreover, how should investors reposition their portfolios to prepare for the next year?

In this article, we will review the investment trends for 2021. Let’s begin.

1.   FTSE100 Expected to Recover – In a Big Way

As per an analyst for Markets.com, the FTSE100 is expected to witness a major recovery in 2021. This primarily depends on whether vaccines allow things to return to normal. Other vital factors that could aid recovery here are Fed anchoring rates and liquidity in financial markets.

The index is expected to deliver a dividend yield of 4% in 2021. If realized, this would make it very attractive for investors in the UK.

2.   Gold Bull Markets Could Continue

Graph showing Gold Price Jan-December 2020
Figure 1: Gold Price Jan-December 2020
Source: Business Insider

Gold witnessed a meteoric rise in 2020. It was at -3.73% in 2019, but rose to29.7% in August 2020. Keeping with this, Goldman Sachs has suggested a bull market for gold in 2021, as well. The commodity is likely to continue benefiting from high investor demand.

Inflation and weakening dollar value are some of the biggest factors driving the bull market for gold. Goldman Sachs has also predicted a 3 percent increase in inflation for 2021, which should boost the price of gold. Investors aware of how gold performs in an inflation-hit economy can take advantage of this.

3.   Rise In Alternative Investments Like Bitcoin

Since its inception, the cryptocurrency market has been subject to high rates of volatility, and 2020 was no different. The price of bitcoin has shown steady growth since September 2020. This can be attributed to increased investor demand and PayPal’s announcement regarding allowing US-based investors to buy and sell cryptocurrencies through the platform in 2021.

That said, investors should proceed with caution when investing in cryptocurrency. It is a high-risk asset and has witnessed numerous highs and lows in the past, as well.

4.   Healthcare Equipment, Travel, Infrastructure, and Commodities Expected to Perform Strongly

As far as investment trends in the equity market are concerned, 19% of investment managers have predicted the Healthcare Equipment and Services sector to perform the best in 2021. Depending on the successful administration of COVID-19 vaccines, experts also anticipate Travel and Leisure companies to make a strong comeback after the disastrous year they have had. 19% of investment managers believe this sector will outperform others in 2021.

Investment managers also expect Commodities and Infrastructure to outdo tech companies next year. These sectors are likely to benefit as the economy recovers in 2021. Tech players are still expected to do well, but they are unlikely to dominate the market as they did in 2020.

Wrapping It Up

Are you wondering how to improve and rebalance your portfolio in 2021? Then get in touch with us. We can discuss investment trends for 2021 and offer the investment advice you need to potentially strengthen your investment portfolio.

Disclaimer: All investments involve risk, and you should only invest capital that you can afford to put at risk. The content of this report is not financial promotion or investment advice. It is general information for reading purposes, and you should speak to a financial advisor before investing.

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