The Top Performing Investment Themes of 2023
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While the S&P 500 rebounded over 24% in 2023, many investment themes soared even higher.
In many ways, the year was defined by breakthrough announcements in AI and the resurgence of Bitcoin. At the same time, investors looked to nuclear energy ETFs thanks to nuclear’s growing role as a low carbon energy source and the war in Ukraine.
This graphic shows the best performing investment themes last year, based on data from Trackinsight.
Blockchain ETFs Lead the Pack
With 82% returns, blockchain ETFs outperformed all other themes in the U.S. due to the sharp rise in the bitcoin price over the year.
These ETFs hold mainly bitcoin mining firms, since ETFs investing directly in bitcoin were not yet approved by regulators in 2023. However, as of January 2024, U.S. regulators have approved 11 spot bitcoin ETFs for trading, which drew in $10 billion in assets in their first 20 days alone.
Below, we show the top performing themes across U.S. ETFs in 2023:
| Theme | 2023 Performance |
|---|---|
| Blockchain | 82% |
| Next Generation Internet | 80% |
| Metaverse | 59% |
| FinTech | 54% |
| Nuclear Energy | 50% |
| Cloud Computing | 49% |
| AI/Big Data | 49% |
| Gig Economy | 48% |
| Digital Infrastructure & Connectivity | 43% |
As we can see, next generation internet ETFs—which include companies focused on the internet of things and new payment methods—also boomed.
Meanwhile, nuclear energy ETFs had a banner year as uranium prices hit 15-year highs. Investor optimism for nuclear power is part of a wider trend of reactivating nuclear power plants globally in the push towards decarbonizing the energy supply. In fact, 63 new reactors across countries including Japan, Türkiye, and China are planned for construction amid higher global demand.
With 49% returns, AI and big data ETFs were another top performing investment theme. Driving these returns were companies like chipmaker Nvidia, whose share price jumped by 239% in 2023 thanks to its technology being fundamental to powering AI models.
Top Investment Themes, by Net Flows
Here are the the investment themes that saw the highest net flows over the year:
| Theme | 2023 Net Flows |
|---|---|
| Robotics & Automation | $1,303M |
| Nuclear Energy | $997M |
| AI/Big Data | $987M |
| Global Infrastructure | $734M |
| Net Zero 2050 | $716M |
| Blockchain | $357M |
| Cannabis & Psychedelics | $270M |
| Emerging Markets Consumer Growth | $203M |
Overall, ETFs focused on robotics and automation saw the greatest net flows amid wider deployment of these technologies across factories, healthcare, and transportation actvities.
The success of AI large language models over the year is another key factor in powering robotics capabilities. For instance, Microsoft is planning to build a robot powered by ChatGPT that provides it with higher context awareness of certain tasks.
Like robotics and automation, AI and big data, along with blockchain ETFs attracted high inflows.
Interestingly, ETFs surrounding emerging markets consumer growth saw strong inflows thanks to an expanding middle class across countries like India and China spurring potential growth opportunities. In 2024, 113 million people are projected to join the global middle class, seen mainly across countries in Asia.
Will Current Trends Continue in 2024?
So far, many of these investment themes have continued to see positive momentum including blockchain and next generation internet ETFs.
In many cases, these investment themes cover broad, underlying trends that have the potential to reshape sectors and industries. Going further, select investment themes have often defined each decade thanks to factors like technological disruption, geopolitics, and the economic environment.
While several factors could impact their performance—such as a global downturn or a second wave of inflation—it remains to be seen if investor demand will carry through the year and beyond.
