Out of several investment opportunities, there are some that are promising and can be profitable in the near future. Are you a new investor intending to make your money work for you? Or are you a seasoned investor looking for new investment opportunities in 2021?
If your answer to any of the above questions is “YES!” we have created this post for you to consider some great investment options, as suggested by experts, for the near future. Agriculture: As per McKinsey, the agriculture and food sector is a $5 trillion industry globally and getting bigger with each passing year. As per USDA ERS, the sector added $1.109 trillion to the U.S. gross domestic product in 2019, a share of 5.2%. With rising research and development (R&D) and the introduction of sophisticated technology to boost farm productivity, the sector offers huge investment opportunities in the coming years. Alternative funds: These comprise private equity, mutual funds, venture capital, hedge funds, and gold. With huge potential to increase returns, provide diversification, strengthen one's portfolio, these are increasingly becoming popular investment options. ESG (Environmental, Social and Governance) investing: For the first time ever, sustainable investment funds surpassed $1 trillion in the second quarter of 2020 and, as per the latest Refinitiv data, ESG bond volumes have reached a record high at above $489 billion in 2020. This makes it one of the hottest investment options in 2021. Fintech: As per data compiled by Yahoo finance, U.S.-based fintech companies, along with their European counterparts, have witnessed a 17% y-o-y surge in funding raised during the third quarter of 2020. The year has been extremely favorable for privately-owned fintech companies that are still in their formative stages. The sector is a great avenue for long-term growth investors. Health: Globally more than $7.8 trillion is spent on healthcare, out of which $3.5 trillion is spent in the USA alone. With the sector growing faster than the world economy and is likely to be significantly bigger in the next five years, the investment opportunity is huge for investors. Hemp and Cannabis: The cannabis industry is projected to grow threefold in the next five years and many investors are betting big in the sector. The industry offers immense investment opportunities for new and seasoned investors, with high chances of making profits. Media: Several media companies are producing commercially-successful films, webseries, documentaries, music, podcasts, and books; and more and more investors are making handsome profits by investing in independent media houses. With the increase in over-the-top (OTT) platforms, making independent artists are leveraging the media to produce quality content and looking for investors to expand their reach. This sector offers great investment opportunities in 2021. Real Estate: Investing in real estate can be lucrative and rewarding as property prices and rents tend to appreciate (and they do considerably in prime locations). After you invest in a house or landed property, you get the rental income from it; and you also make a good profit when you decide to sell it after a few years. Tech: In the information age and the era of technology, the growth in the tech sector is inevitable. The significance of the sector increased considerably after the pandemic as work-from-home and cashless transactions became the new normal. The sector offers immense investment opportunities in 2021 and beyond. We are hosting a webinar Investor Hot Seat on January 28, 2021, from 11 am to 3 pm (Pacific Time), which will enable you to watch presentations by entrepreneurs and companies from the above sectors and determine if you are willing to invest in them. You can register on Eventbrite (complimentary registration for investors) and or on Zoom for the January 28th webinar. To view the directory of the upcoming and previous investor webinars, click here.
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For new and experienced investors in the Cannabis Industry we want to provide a few tips to mitigate risks to increase the outcome of generating a positive ROI.
Asset Allocation & Portfolio Diversification Asset allocation and portfolio diversification go hand in hand. Portfolio diversification is the process of selecting a variety of investments within each asset class to help reduce investment risk. Diversification across asset classes may also help lessen the impact of major market swings on your portfolio. Asset Classes Traditional asset classes include stocks and bonds while alternative asset classes include real estate, commodities, foreign exchange, art and other collectibles. Investors are well served to view cannabis as an alternative asset class and to carefully consider sector diversification as an essential alpha generation strategy. Capital placement decision-makers can effectively isolate direct federal risk via separation of plant-touching and ancillary exposure in portfolio construction. Plant-touching Portfolio Sectors Cultivation: Indoor, outdoor, and greenhouse cultivation provides cannabis flower to consumers and manufacturers alike. While prices and margins remain attractive, investors are well served to understand future valuation and sector impact from cannabis spot price volatility. Extraction: Extraction is the process of creating desirable byproducts from plants while leaving behind undesirable compounds and plant matter. Cannabinoids and terpenes are extracted to provide aroma, flavor and effect. Most extraction methods utilize butane, ethanol or super-critical CO2 to produce concentrates such as oils, kief, hash and rosin. The extract category is one of the fastest growing in the U.S. today. Manufacturing: Infused bath salts, terpene-infused cannabis beer and slow-release topical patches are just a few of the recent innovations in the infused products category. In the short to medium term, one can expect positive margin impact from cultivation technology innovation. Testing: Testing involves the scientific measurement of cannabinoids and includes microbiological analysis, pesticide screening and residual solvent detection. With a deep taproot and miles of secondary roots, cannabis is an effective bio-dynamic accumulator plant and gathers micronutrients, macronutrients and minerals to store in its leaves. Labs are enjoying escalating demand and healthy margins as legalization has made testing increasingly mandatory. Distribution: Distribution is an asset heavy sector focused on the process of moving product from business to business. Relationships are as important as effective logistics in driving market share; expect heavy consolidation in this sector over time. Retail: Gatekeepers to consumable cannabis products, storefronts and delivery provide ease and enhance the consumer experience. While we expect brick and mortar retail to experience its laden challenges over time, this sector has a generous runway to educate new consumers and to evolve the consumer experience. Ancillary Portfolio Sectors Real Estate: Collateralized hard assets with profitable tenants add outsized return potential to a mature investment market. Dedicated and sophisticated capital sources benefit from healthy current income in addition to long-term capital appreciation. Healthcare: Biotechnology, nootropic development and genomic breakthroughs add to the health-enhancing possibilities of this ancient plant. Given its ability to impact ~700 disease states, cannabis will revolutionize healthcare as we know it. Valuations are reflective of the premiums successful companies might deserve and command in a post-legalization M&A cycle. Finance: Banking, crypto-currency, insurance, investment groups, payment solutions and funds are all part of this important and high-growth sector. The U.S. federal stance combined with the need for these services has led to significant innovation in the space. Expect growth to escalate with legislative progress. Business and Professional Services: These services include office administration, career placement assistance, security, inventory tracking, compliance, cleaning, waste disposal and environmental remediation. This remains a highly fragmented space with many nascent opportunities and few regional players currently emerging. Agricultural Technology: Consistent and expected price declines have led to great adoption of automation for yield enhancement and cost reduction. Technological advances will continue to drive commoditization and increase distance from the connoisseur market. Time horizons and spot price forecasting are important investment considerations. Technology, Media and Telecom (TMT): Investable TMT sub-sectors include software, hardware, advertising, broadcasting, publication, e-commerce, artificial intelligence and robotics. Rapid technological innovation fueled by high margins is having a measurable impact on all rungs of the supply chain ladder while improving consumer experience immensely. Those companies that can capitalize on data collection will be well rewarded. Consumer: There is a large market that is represented by consumption devices, clothing, lifestyle accessories, gifts, memorabilia and collectibles. For every dollar spent on cannabis, it is estimated that nearly five dollars are spent around it and consumer spending constitutes a healthy percentage of the total. As this industry continues its rapid growth, additional sector expansion will be driven by the industrial adoption of hemp as well as mainstream acceptance of this original superfood. A diversified investment approach with an eye to hedging form the basis for systematic portfolio construction. Low correlation with other investable asset classes ultimately serves to reduce overall portfolio volatility, increasing the health of our investment portfolios as this plant continues to improve the health of our human portfolio. Article Research: Mazakali |
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