Insights

2019 Investing Trends: New Products Mirror Consumer Demands

It is the start of a new year which means it is time to make some predictions and look ahead to 2019 investing trends. Throughout 2018 we saw a number of key movements in the investing industry – from regulation, to players as well as new innovations.

Evolution in investing seems to not be letting up as we move into a new year. One key trend that is underway is investing that aligns with interests – herein enters SRI and cryptocurrencies.

 

Using Money to do Good: The Growth of ESG and SRI Investing

For many advisors, environmental, social and governance (ESG) investing presents a golden opportunity to build investing among a key target group – Millennials and GenZ. The push for greater transparency has opened up questions around investing, more than ever before.

Social investing, though not new, has had increasing interest in the face of some key macro factors such as global warming and mass shootings. Research completed by Cerulli at the end of 2017 showed one-third of advisors using ESG/SRI (socially responsible investing) strategies, with another 10.9% that had planned to during 2018.[1]  And for these advisors, there is a very clear business case to be made to integrate more socially responsible investment options. At the start of 2018 US assets under management in SRI investments hit $12 trillion – that is a 38% increase from 2016 and represents slightly more than one-quarter of all assets under management.

ESG/SRI investments have been embraced by embraced and even pioneered by some of the largest “traditional” asset managers in the industry. Within 4Q18 alone BlackRock made a number of moves to solidify their emerging dominance in the space:

1) BlackRock and Thomson Reuters are now offering a diversity and inclusion ETF and the firm has launched six other ESG ETF funds, along with adding ESG metrics like carbon intensity to its iShares website.[2]

2) BlackRock also launched the iShares Global Green Bond ETF (BGRN) for projects with environmental benefits.[3]

As the growth of ESG/SRI investments continue it is expected that they may also become more mainstream and begin to drive more policies and practices within the investing landscape.

 

Cryptocurrency Becomes Conventional

Cryptocurrency and digital investing made a number of sensational headlines over the past few years. At the same time we saw values of Bitcoin and the like rise and fall and in 2019 we could see these swings calm down a bit.

Individual investors may have been the cause of the wild ride that cryptocurrencies have had thus far but receptivity from advisors and institutional investors may help to push cryptos into more stable territory.

 

Investors Willing to Explore, Need More Education

Cryptocurrencies have made headlines seemingly everywhere – and investors are taking note. The problem is however a lack of understanding to really make the plunge in purchasing. Our 2018 research shows that nearly 8 in 10 (79%) agree that they do not understand how cryptocurrencies work – and nearly three-fourths of people (74%) would like to have a better understanding of how cryptocurrencies work.

And the first stop for investors may be the financial brands that they know and trust. Our data shows that over half (56%) of the consumers we surveyed said they’d be more likely to consider purchasing a cryptocurrency if an established financial institution were to offer options.

Going in 2019 it seems like ‘traditional’ players entering the crypto game may become a real possibility and help drum up even more investor interest.

 

Institutional Investors Act on Crypto

Cryptocurrency has also reached a new level of serious interest thanks to institutional investors.

Bloomberg reported that large buyers such as hedge and endowments funds have been consistently purchasing over $100,000,000 worth of digital coins through private transactions.[4]

Miners are now scheduling regular, over-the-counter (OTC) coin sales. Some have even set up their own liquidity desks and operations to accommodate the estimated $250 million to $30 billion in trades.[5]

With new crypto investment products launching in a fairly regular succession, it is imperative to stay ahead of and offer crypto trading products.

 

Looking Ahead…

With the push on new investment products we may see further nuances with regulation and distribution strategies. For investors and advisors alike, options have certainly changed, with even more expected into the future.

Interested to Learn More? Stay ahead of the Latest Market Trends with Engine Insights.

 

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[1] “ESG Trends: Advisors Plan to Boost Socially Responsible Investing.” Investor’s Business Daily. November 16, 2018.
[2] “Investment Product and Service Launches.” Plan Sponsor. October 25, 2018
[3] “BlackRock Expands Sustainable Investing Platform with New iShares Global Green Bond ETF.” MarketWatch. November 15, 2018.
[4] “Institutional Investors Are using Back Door for Crypto Buys.” Bloomberg. October 1, 2018.
[5] “How Institutional Investors are Changing the Cryptocurrency Market.” Forbes. October 19,2018.

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