Following a challenging 2021, during which global equities were exposed to stretched valuations and index concentration, Macquarie’s investment specialist, Luis Sarmiento, expects things to remain much the same in 2022.
In an interview with InvestorDaily’s sister brand ifa, Mr Sarmiento noted that uncertainty would continue to be a major market theme in 2022.
“No-one can accurately predict the likelihood or economic impact of future COVID variants, but periodic spikes of volatility are likely to continue to feature in equity markets much as they did in 2020 and 2021,” Mr Sarmiento said.
But he stressed that as much as these spikes can create disruption, they can also bring opportunities for active investors.
“Selecting the right companies to own at the right time matters, for example over 2021 to the end of November, despite very strong global equity returns, over a quarter of companies in the MSCI World Ex Australia Index lost money for investors.”
Mr Sarmiento also noted the prevalence of responsible investing in global equities, predicting it would remain a key growth area within asset management.
“ESG considerations can be an excellent lens for identifying the companies that stand to benefit as economies transition and transform, for example, to meet CO2 emission reduction goals. Still, the usual warnings around not overpaying for companies and risks around rapid technological evolution apply,” he said.
“Altogether, like with asset allocation and stock selection, an active approach to ESG may be the better way to bring ESG into your risk and return investment framework.”
