I asked an AI about the top five investment risks and opportunities in 2023

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ChatGPT-3 gave me an accurate summary of the current state of play in macro and markets. The top investment risks for 2023 include volatility, inflation, regulation, cybersecurity and competition for assets. In this environment, the top investment opportunities according to the AI are renewable energy, real estate, biotech, AI and cryptocurrency. Here is how the AI explains its choices.

What are the top five challenges for investors in 2023? 

 
1. AI: "Increased competition from other investors – with more players entering the market, competition for investments is expected to become more intense."
 
My 2p: This is supported by news about private equity, infrastructure, green investments and liability matching assets, where appetite often exceeds available opportunities, producing the proverbial ‘dry powder’. 
 
2. AI: "Volatility in markets – volatility in stock, bond, and currency markets can make it difficult for investors to make consistent and profitable investments."
 
My 2p: 2022 was certainly one of the biggest bear markets in history, with US equities losing nearly 20% in value. There was similar volatility in other developed markets – and the fallout from the mini-Budget and rising rates is still felt in UK and global bond markets. 
 
3. AI: "Inflation – it can erode the value of investments over time, making it more difficult for investors to make a profit."
 
My 2p: While there are already signs that inflation has peaked, 2022 saw rapid rises in many goods, with fuel increasing by nearly 70%, food up by 10% and UK energy price caps revised upwards several times, starting a cost-of-living crisis and threatening a global recession. 
 
4. AI: "Regulatory environment – changes in the regulatory environment can have an impact on investments, with potential for new restrictions or taxes to be introduced."
 
My 2p: This could not be truer of the pensions and insurance landscape, but with the Edinburgh reforms under way in the UK, the implementation of COP15 and COP26 agreements and regulatory measures to counter greenwashing, the entire financial industry will be deeply affected. 
 
5. AI: "Cybersecurity threats – they are increasing as hackers become more sophisticated, putting investments at risk."
 
My 2p: 2022 saw Google block the biggest ever distributed denial of service (DDoS) attack on its servers, 1.2 million credit card numbers leaked on a hacking forum, and 5.4 million Twitter accounts stolen. It is not surprising that the Pensions Regulator laid out cybersecurity guidance for schemes in 2022. 
 

What are the top 5 opportunities for investors in 2023? 

 
1. AI: "Biotechnology – it presents a wealth of opportunities for investors in 2023. Companies are researching and developing innovative treatments for a variety of diseases, and this could lead to significant returns for investors." 
 
My 2p: Biotechnology has been a popular investment theme over the span of 2022. The global pandemic increased the focus on the traditionally defensive sector of healthcare, but it is also linked to the Sustainable Development Goals, in particular SDG 3 of good health and wellbeing. 
 
2. AI: "Robotics and artificial intelligence (AI) – they are becoming increasingly popular and are expected to be a major source of growth in the coming years. Many companies are investing heavily in these sectors, making them attractive investment opportunities."
 
My 2p: mallowstreet is no exception, we are embracing AI and exploring how it can help us. 
 
3. AI: "Cryptocurrency – it has seen a huge surge in popularity in recent years and is expected to continue to grow in the coming years. With its decentralized nature and potential for high returns, it is an attractive investment opportunity."
 
My 2p: This may not be one for institutional investors given the volatility of crypto assets, but it is worth noting that the FCA is consulting on a regulation package covering money laundering in and the advertising of cryptocurrency products. These measures come after the collapse of FTX, a crypto exchange and hedge fund, in 2022. 
 
4. AI: "Renewable energy – it is becoming increasingly important as the world looks to reduce its reliance on fossil fuels. Investing in renewable energy companies is a great way to capitalize on this trend."
 
My 2p: Infrastructure and green investments make the climate transition possible. While not all real assets are met with the same enthusiasm, or have the right ESG credentials, renewable energy is a straightforward choice – which also helps countries improve their energy independence. 
 
5. AI: "Real estate – it is another great investment opportunity for 2023. With the current low-interest rate environment and the increasing demand for housing, investing in real estate could be a great way to make a return."
 
My 2p: The UK property market is not helped by delayed redemptions and the liquidation of some retail funds, as well as a shortage of development and investment opportunities with the right green credentials. The rising interest rate environment is affecting the premium real assets can command globally, and demand in different sectors is likely to diverge. 
 

Re-defining the value-add of technology and humans 

 
The power of AI has increased exponentially just in the last few months of 2022. As we at mallowstreet Insights grow more familiar with its rapidly expanding functionality, I reflect on two things: 

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