Investment Outlook 2022 – Part 4

Return-Free Risk?

In this collection of 2022 outlook papers, PGIM offers readers a handful of their best investment ideas, including private equity secondaries and a re-examination of post-pandemic real estate sectors within large cities. Other asset managers provide their annual outlooks for alternative assets, as well as a more focused look specifically at private markets.

But besides contending with (potentially non-transitory) inflation, investors are also faced with high equity market valuations, especially in the United States. Is the QE-driven all-asset bubble now presenting investors with return-free risk instead of risk-free returns, as John Hussman warns?

Annual Best Ideas: Opportunities for long-term investors to thrive (PGIM, 2022)

Does the current recovery have staying power? Experts from PGIM business lines present their best ideas for long-term investors, including disruptive technologies, real estate sectors such as offices and apartment complexes, and capitalising on inefficiencies in emerging market equities.

Investment Outlook 2022 (BNP Paribas AM)

BNP Paribas Asset Management includes sections on key themes such as the green economic transition and disruptive innovation in addition to their traditional outlook for global markets. They also project that European equities will gain some ground against U.S. equities in the coming year.

Global Investment Outlook – New Year 2022 (RBC GAM)

For compliance reasons, this paper is only accessible in certain geographies

A variety of economic headwinds and RBC Global Asset Management's below-consensus GDP projection of 3.5% growth for developed nations both set the stage for their 2022 multi-asset outlook.

Real Assets 2022 Outlook: All change (LGIM)

For compliance reasons, this paper is NOT accessible in the United States and Canada

Assets under management in private markets have grown three times as fast as public equity since 2000. Several factors have fuelled LGIM's positive outlook for private markets, including projected infrastructure spending, the use of real estate as an inflation hedge, and efforts to deliver social impact.

Fixed Income: COVID Year 3 and Counting (Franklin Templeton Investments, 2022)

For compliance reasons, this paper is only accessible in the EMEA region

Given a degree of persistent inflation, Franklin Templeton recommends a shorter duration for fixed income portfolios, but sees opportunities in emerging markets debt and U.S. high yield markets.

Gold Outlook 2022 (World Gold Council)

For compliance reasons, this paper is only accessible in certain geographies

WGC describes why the demand for gold in 2022 may be similar to 2021. On the demand side, as inflation remains high, investors seek out gold as a hedge. Additionally, the projected demand for gold from the jewellery industry and from central banks is expected to remain high.

BII-GIC: Embracing uncertainty – November (BlackRock, 2021)

For compliance reasons, this paper is only accessible in the United States and Canada

The significant impact of Covid on the economic and financial markets landscape has brought into focus the importance of incorporating uncertainty into any investment process. The unusual, stop-start nature of activity has no historical precedent, meaning lessons from the past are unlikely to be very helpful. In addition, the world faces several structural changes such as the challenge of combating climate change, the implications of unprecedented monetary-fiscal coordination, and the growing role of China.

Return-Free Risk (Hussman Funds, 2022)

John Hussman puts forward that the Federal Reserve-sponsored all-asset bubble has now placed investors in an environment where they are faced with return-free risk instead of opportunities for risk-free returns.

Inflation Is Here! What Now? (Research Affiliates, 2022)

CEO and CIO of Research Affiliates, Chris Brightman, CFA, discusses rising inflation levels in G7 economies that have largely been spurred on by increased government debt and deficits.

2022 Global Alternatives Outlook (JP Morgan Asset Management)

JP Morgan Asset Management's Global Alternatives Outlook for 2022 spans the gamut of hedge funds, real assets, global real estate, private equity, and private credit. It also includes a section on the present-day macroeconomic landscape.

Top Considerations for Private Markets in 2022 (Mercer)

Mercer presents their annual compendium of key considerations for private markets, including the increasing use of Special Purpose Acquisition Companies, long-term return expectations, and the outlook for venture capital, private equity, private debt, and private infrastructure.