Exploring 2023’s Hottest Sectors For Investment (2024)

While investing in certain standalone companies can yield excellent results, you always need to look at the context surrounding their sectors.

15-20 years ago, a new clothes store popping up in malls all over the country might have been a tempting investment. Clothes stores were booming, right? That’s until you looked at the data and saw that eCommerce was the up-and-coming retail sector, not brick-and-mortar stores.

Keeping an eye on which sectors are set to have a boom paid off for investors in the energy sector, which delivered a return of 54% in 2022.

And with the market only making modest increases on its 2022 performance, now is not the time to be playing fast and loose with your investments. Now’s the time to make data-driven decisions only, about which sectors to invest in and when.

With that in mind, here are some of the best sectors to invest in this year, according to the experts.

Healthcare

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While the world is breathing a collective sigh of relief at COVID-19 drawing to a close, the importance of having a robust healthcare system is at the front of everybody’s minds. Few industries have played such a central part in our recovery as healthcare, and, to be more specific, the biopharmaceutical industry.

Biopharma is responsible for many of the everyday treatments we take for granted, such as insulin, and more topically, the COVID-19 vaccine. Biopharma differs from traditional pharmaceuticals in that the treatments are cultivated from living cells, not synthetic chemicals.

From sterile fill and finish service providers to biopharmaceutical manufacturers, these companies are in high demand – and for good reason. As antibiotic resistance becomes more prevalent and new diseases emerge, we’ll be looking to this sector to answer our woes with the creation of new treatments, as well as gene therapies.

The fear of the emergence of another COVID variant or an even more deadly infectious disease makes this industry particularly lucrative, so it’s well worth your investment money this year.

Energy

In 2021 and 2022, we saw the supply of oil and gas reduce, especially as Russia’s grip on its resources tightened due to the war in Ukraine. As economic principles demand, when supply goes down, demand goes up, so we saw energy prices soar.

They’re due to even out a little over 2023, but we still expect to see high returns on energy investments. If you want to make some money while doing your part for the planet, consider investing in green energy.

Many companies and governments are scrambling to reduce their dependence on oil and gas by introducing renewable energies to the market, making green energy a sub-sector well worth exploring.

Consumer Staples

There are global reports that the UK, US, and Europe will enter a recession in the next year or so. While this recession isn’t likely to occur at the same level as 2008’s economic crisis, it will still have a significant effect on consumer spending.

With this in mind, the safest choice for investors this year is consumer staples that households buy whether in a recession or otherwise. Look for companies that produce everyday necessities including food and beverages and hygiene products.

According to Fidelity, consumer staples is known as a defensive sector, meaning it holds up much better than other sectors during a market rout. This analysis held up during 2022 when despite global economic difficulties, consumers continued to shop for necessities.

Low unemployment has helped to give households a buffer against rising grocery prices, meaning that although these high prices have significantly affected those in precarious or poorly-paid work, the majority of the middle classes are continuing to shop for essentials as normal, with only a few adjustments to spending habits.

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