Goldman Sachs Asset Management has published its top investment ideas for 2022 in a report entitled New Challenges, New Opportunities: Eight themes we’re watching.
For much of 2021, many forces stoking inflation seemed transitory. But inflation may not fall quickly in 2022. Equities have offered the best chance of outperforming inflation over the long term, while multi-sector credit strategies can tilt towards floating-rate instruments and other securities that may perform well in an inflationary environment.
Rising rates and the policy unwind
Investors should be prepared for tighter monetary policy in 2022. Short and ultra-short duration fixed income, select high-yield bond and emerging market debt strategies, and private credit offer opportunities in addition to those above.
Beta gives way to alpha
Valuations across asset classes are near record highs. Being on the right side of inflation and disruption will be critical and favors investing actively across asset classes, with a focus on strategies with a wide opportunity set and on alternatives.
Looking beyond US equities
Non-US equities may be attractive complements to US stocks, trading at lower valuations for potentially similar earnings growth. Global thematic strategies are more targeted ways to capture growth driven by innovation, sustainability, or changing consumer trends.
We believe ESG considerations will matter more to investment success. Options include ESG-enhanced, thematic, impact, and active fixed income strategies that incorporate ESG, as well as sustainable infrastructure, real estate, and private investment.
China: Too big to ignore
In 2021, one-third of the top 50 performing stocks in the MSCI All-Country World Index traded on Chinese domestic exchanges. Chinese A-shares, government bonds, credit, and growth and venture capital investments all offer opportunities for investors.
Emerging opportunities in emerging markets
Long-term investors might consider coupling an emerging markets (EM) equity allocation excluding China with a China all-shares strategy (onshore A plus offshore shares) to capture the full set of opportunities across EM. EM corporate bonds may help boost income and stabilize portfolios.
Using disruption to your advantage
Active thematic investments across public equities and alternatives give investors direct access to key growth trends, including technological innovation, changing consumer habits, healthcare demand, sustainability, and specialized infrastructure and real estate.