Investment Solutions


Investment Solutions


Investment Solutions


Key Investing Themes for 2023

Rene Anthony

Thursday, January 19, 2023

Thursday, January 19, 2023

What might be some of the major developments in the investing space over the next 12 months?

What might be some of the major developments in the investing space over the next 12 months?

Key takeaways:

  • Inflation and rates will underpin the battle between value and growth stocks

  • Last year shift in the global energy mix could challenge governments to make concerted efforts in the ESG space

  • Investor trends suggest ETFs remain likely to continue attracting net inflows throughout 2023

  • Bonds typically benefit when interest rates ease, something that economists argue could be required to stave off a deep recession

Last year marked the end of ultra-loose monetary policy, with inflation rattling households, governments, and investors around the world. 

Risk assets bore the brunt of the market sell-off after a bumper period, but the economic outlook is a vastly different proposition now compared with 12 months ago.

With major challenges ahead, we're taking a look at some of the key investing themes that might be on the minds of investors in the year ahead. don't forget these topics: 

Value Investing vs Growth

The first 18 months of the pandemic favoured growth stocks as easy monetary policy sparked a bull run of near unprecedented proportion.

Since late 2021, the pendulum has swung in the other direction, with growth stocks sold off sharply as central banks aggressively hike interest rates. Investors pivoted into value stocks, which typically do not suffer from the same valuation concerns in the face of an uncertain economic outlook.

We are now at a critical juncture where both growth and value stocks have had their time in the sun. In 2023, look out for key themes like easing inflation and a peak in interest rates, which could influence whether growth or value stocks outperform over the coming months. 

If inflation remains sticky, value stocks or those that are inflation-proof may remain favourites among investors. Should inflation decrease rapidly, or rate cuts enter the equation later in the year, these forces may support growth stocks.

On a related note, income stocks could face tough decisions if an economic slowdown comes to fruition, as lower earnings and concerns about the macro environment might force a rethink on the size of dividend payouts.

ESG Investing

With the transition to renewables underway, expect the topic to be a focal point across both the political sphere and financial markets throughout 2023. 

At a global level, governments will be pushed to increase their efforts to meet net-zero commitments, which is likely to involve further policy support and spending favouring renewables. Although fossil fuels were one of the standout market segments in 2022, this was largely a byproduct of the war in Ukraine, which prompted a shift in the global energy mix. That shift remains a controversial matter since it has given new life to fossil fuels like coal.

More pressure is likely to emerge regarding a pathway for governments to pursue green energy formats, including greater dependence on renewables. The phasing out of coal plants, at least in Australia, will almost certainly remain a talking point, as will the role of gas as part of the transition. Expect government scrutiny and ongoing legal challenges regarding approvals for new gas projects.

At the same time, the progress of key merger and acquisition activity in the energy space stands to shape public discourse until such time that renewables offer more scale and reliability.

These matters may draw renewed attention to ESG investing in 2023. Investors, particularly funds, are demanding greater action and consideration for the environment. Ethics in the supply chain may also take on a greater role as a growing source of critical minerals deemed vital for the energy transition come from different corners of the world.


According to BetaShares Australian ETF Review for 2022, the local ETF industry significantly outperformed Australian managed funds last year. 

The ETF industry chalked up $13.5 billion of net inflows, compared with a net outflow of $26.8 billion for the unlisted funds industry. This continues a trend that has played out over four of the last five calendar years, with 2021 proving the sole exception. Over that time, cumulative inflows amount to $71 billion, versus just $3 billion for unlisted funds.

Despite investor appetite favouring ETFs, funds under management finished the year lower by $3.2 billion, concluding 2022 with a value of $133.7 billion. That followed a record $42 billion increase in 2021. 

Notwithstanding last year poor performance for equities, the data suggests that ETFs remain in prime position to continue attracting net inflows throughout 2023. More than 50 new ETF products were launched last year, which was a record feat.

ETF investing is also supported by 6% growth in the number of ETF investors across the country, as well as record trading values across the ETF segment - $117 billion versus $95 billion the year prior. 

Passing investing ETFs, particularly those leveraged to Australian equities, led net flows, but if global equities turn around last year dismal performance, investors may be more inclined to review that trend.

BetaShares expects industry funds under management for the Australian ETF sector to reach $150 billion in value by the end of the year.


While traditionally viewed as a more defensive investment, bonds were not spared from the dramatic market sell-off in 2022. Soaring inflation and the fastest tightening in monetary policy in decades meant the trading environment was unfavourable for bonds.

However, with US inflation now showing signs of cooling, interest rates expected to approach terminal levels over the coming months, and the potential for rate cuts if the economy enters a recession, bonds are starting to gain more publicity once again.

Some economists argue that if the economy takes a turn for the worse, the Federal Reserve may have to respond by loosening monetary policy and cutting rates to mitigate the risk of a deep recession.

Rate cuts tend to drive up bond prices, in turn lowering yields. This is because the majority of bonds pay investors a fixed interest rate that becomes more attractive if interest rates decrease, fuelling demand for bonds.

Yields have decreased dramatically from the highs we witnessed late last year, which is indicative of expectations that the economy faces tough times ahead. This has prompted buying interest in bonds over recent months, as investors eye more appropriate value'.

Learn more about investing in exchange-traded bonds here.

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