Investment Research: The Approach to Verdict Future Opportunities

Financial decision-making becomes easy with the help of Investment research. In this world everything relies on data, investors mainly use data, analytics, and future trends to make decisions that are capable of achieving returns and managing risks. While availability in terms of data sources and analytics tools is unlimited, the investment research process today has become far more complex and sophisticated. This article represents an attempt to go deeper into the role of numeric and data in investment research, future trends, analytics, and emerging opportunities for investors.

Investment Research – Access to potential data

Investment research means collecting, analysing, and interpreting data to assess potential financial assets. In other words, its central purpose is to offer knowledge useful in decision-making among investors, allowing them to make well-versed decisions on stocks, bonds, and alternative assets such as real estate and cryptocurrencies.

Traditionally, most investment research was done by institutional investors, including mutual funds, hedge funds, and investment banks. Today, however, with the democratization of data and the proliferation of digital platforms, tools to carry out research are available to retail investors.

Future Trends in Investment Research – Technologies and Market Dynamics

Investment research is rapidly growing because of changing market dynamics and new technologies. Some of the trends will shape the future of this field (Investment research).

AI and Machine Learning

AI and machine learning are revolutionizing the process of research for investors. They have accessed amounts of data that human analysts could not possibly find. For instance, one of the hedge funds with the best returns on equity, Renaissance Technologies, utilizes its machine learning algorithms to identify trading opportunities, securing 66% annualized returns between 1988 and 2018.

ESG Investing (Environmental, Social, Governance)

ESG investments are gaining popularity; investors are interested in companies that are strong in their environmental, social, and governance practices. ESG data gives an investor a vehicle to assess companies based on factors other than financials.

According to Morningstar’s 2024 study, Global sustainable funds attracted an estimated $4.3 billion in net new money, up from a restated outflow of $2.9 billion in the first quarter.

ESG scores and metrics, such as carbon emissions, workforce diversity, and corporate governance structures, are for investors who want to hold their investments in line with personal values while achieving long-term performance.

Blockchain and DeFi (Decentralized finance)

Blockchain and Decentralized finance continue to challenge the financial systems. To identify risks and opportunities in the ecosystem there is a need for proper research. Total value locked in Decentralized finance in all types of platforms surged very rapidly from $25 billion at the tail end of 2020 to over $55.95 billion at the middle of the year 2024.

Already, tokenized assets, cryptocurrencies, and blockchain-based financial products will be researched. In the coming years, more investment-related topics will also be studied depending on in-depth research about blockchain networks, smart contracts, dApps.

Democratization of data

Democratization of data means investment research must be available to many and not a few. This means every platform has to be made available to retailer investors as much as it is for institutional ones. Algorithmic trading platforms and data analytics software are becoming available for use among retail investors. Consider that participation of retail investors in the platforms has grown up to 50% from last year alone in 2023 at least partly based on real-time market data, charts, and research reports.

Opportunities in Investment Research – Emerging Markets and Globalization

Emerging economies are an interesting investment playground with rates of growth in those respective economies being extremely rapid and showing increasing positivity-India, Brazil, Southeast Asia, and many other regions. Investment research identifies promising assets and manages risks associated with these dynamic economies.

Opportunities in Investment Research

Emerging Market Growth

As per the International Monetary Fund (IMF), Developing market economies are estimated to advance by 4.4% in 2024, contrasted with a growth rate of only 2.9% in advanced economies. Their development is based on leading countries like India, Brazil, and Indonesia through their procedure of swift industrialization and population growth. India is going to be the third-largest economy in the world by 2030 when GDP is going to exceed $7 trillion.

Digital and Emerging Technologies

In most of these developing markets, instead of executing at an intermediate pace, it goes to the final stages of development. Mobile money transactions have soared in Africa, to a record $836.5 billion in 2022 compared to $495 billion in 2020, says a report by GSMA.

Private Markets and Alternative Assets

Another critical area for investment research is the growth of private markets, such as PE, VC, and real estate. Most investors now look at private markets that offer more scope for a higher return in this scenario, given the increased competition and efficiency in the public markets.

Investment Research: Private Markets & Alternative Assets

Private Equity

The global private equity market reached an all-time high of $6.3 trillion AUM in 2023, double the amount it had in 2019, at $4.5 trillion. The figure above is through Preqin. Private equity investment research entails checking on the performance of PE funds, the worth of a company and how the industries are concerned lately. The private equity firms usually concentrate their attention on those companies that tend to experience very poor performance or those companies that are sold in the market at prices lower than the prevailing market value. When such companies are acquired by these firms, various strategies are enforced to rejuvenate and transform the business.

Venture Capital

The venture capital investment landscape continues to follow a growth trend, especially in areas such as the technology sector, healthcare, and renewable energy. In the calendar year 2023, funding for venture capital around the world totalled a staggering $620 billion. Some sectors like AI, blockchain technology, and biotechnology startups are high-funding sectors that are responsible for large investments. It also comprises the evaluation of the firm’s ability to adapt and be profitable on a higher scale, which are other indicators of success in the competitive future landscape.

Real Estate

For long-term returns and variation real estate continues to be a choice for investors. The report from PwC gives the global market for real estate to reach a staggering $13.2 trillion by 2025.
Investment research in real estate requires strict scrutiny of many factors, which include general market trends, assessment of property value and rental yields, and macroeconomic variables like interest rates and inflation; these factors are the most important resources toward ideal investment decisions.

Magistral’s Services for Investment Research

Investment research can sometimes be difficult for the investment managers. It is essential to have unbiased opinions while looking at opportunities in detail. Magistral helps clients choose the appropriate opportunity according to their style of investment and complete the paperwork required to seal the deal. Our range of investment research services covers all stages of the deal.

Industry Research

Validating various industries and prevailing trends of industries.

Profiling of firms and Competitor landscaping

With proper analysis and Profiling of firms, we help to understand the market positioning of the competitors.

Investment Memos

Accumulating professionally drafted memos that describe the opportunity, risk, and financial predictions of an investment.

Inbound Pipeline Evaluation

It evaluates potential investments to help clients prioritize opportunities based on strategic fit and financial potential.

Financial Modeling

Industry-specific models applied in deriving fair value measurements and predicting future outlooks.

Preparing Pitch Decks

Based on specific needs and requirements related to design, data and research we create pitch decks for clients.

Lead generation

Searching for leads for both buy-side and sell-side trades, can be in terms of getting e-mail addresses, telephone numbers, etc.

PoVs and Newsletters

Assist in connecting with the right set of audiences through Marketing content like newsletters and PoVs.

About Magistral Consulting

Magistral Consulting has helped multiple funds and companies in outsourcing operations activities. It has service offerings for Private Equity, Venture Capital, Family Offices, Investment Banks, Asset Managers, Hedge Funds, Financial Consultants, Real Estate, REITs, RE funds, Corporates, and Portfolio companies. Its functional expertise is around Deal origination, Deal Execution, Due Diligence, Financial Modelling, Portfolio Management, and Equity Research

For setting up an appointment with a Magistral representative visit www.magistralconsulting.com/contact

About the Author

The article is authored by the Marketing Department of Magistral Consulting. For any business inquiries, you can reach out to prabhash.choudhary@magistralconsulting.com