5 popular investment trends for the second half of 2024
Seasoned investors often approach markets with a long-term view, using short- and medium-term volatility to buy into the themes they believe will profit over many years. While identifying these trends is difficult, tuning out the noise can help you focus your portfolio on the winners, possibly resulting in significant gains.
Here are five of the most popular trends right now — including several themes showing significant growth potential in the rest of 2024 and beyond.
1. Generative artificial intelligence
Generative AI, a subset of the broader AI technology, is accelerating digital innovation across industries. It creates new content such as poetry, art, music, and videos in seconds using vast amounts of text. In business, it enhances creativity and productivity, potentially transforming how we work. McKinsey Digital estimates that generative AI could increase global corporate profits by $2.6 trillion to $4.4 trillion annually.
2. Small-cap stocks
High-profile large-cap tech stocks garnered most of the attention in early 2024. However, small-cap stocks are becoming attractive again due to their more appealing valuations. These stocks offer high growth potential and attractive markets, though they come with higher risk. For those interested in small-cap opportunities, investing in small-cap ETFs might be a prudent approach.
3. High interest rates
With high-yield savings accounts and certificates of deposit (CDs) offering returns above 5 percent, and Treasury bill yields at multi-year highs, investors are turning their attention back to fixed income. Strategies like building CD ladders can help mitigate reinvestment risk. It’s crucial to consult with a financial advisor to choose the best fixed-income assets based on your financial situation and goals.
4. REITs (Real estate investment trusts)
As interest rates are anticipated to decline, REITs may rebound in the year ahead. REITs offer a way to invest in real estate without the hassles of property management and enjoy significant tax advantages. Publicly traded REITs often provide high yields and lower management costs. For those preferring a fund approach, consider the best REIT ETFs to avoid common REIT investing mistakes.
5. Cash is king
Amid global tensions, prolonged inflation, and other economic challenges, many investors are turning to cash for stability and liquidity. Money market funds have seen massive inflows, with U.S. money market funds holding a record $6.5 trillion in assets as of May 2024. Cash offers flexibility, allowing investors to act quickly when market opportunities arise.
