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2022 Multi-Asset Outlook

Multiple authors
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The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.

Multi-asset insights

Key points

  1. We expect COVID concerns to fade, consumer spending to persist, and the economic recovery to continue but with higher inflation and less policy stimulus. On balance, we favor equities over bonds.
  2. Within equities, we prefer developed over emerging markets (EM) given China’s slowdown and the hardships EM countries face post-pandemic, including slower growth, high inflation, worse fiscal deficits, and greater political volatility.
  3. We are most positive on commodities, given that inflation pressures are likely to persist longer than the market thinks.
  4. Interest rates are vulnerable to a broader reopening, inflation, and reductions in central bank support.
  5. Downside risks include a surge in inflation that forces faster-than-expected central bank tightening or a severe China slowdown. Upside risks include a “Goldilocks” scenario (just the right amount of monetary tightening) that extends the cycle or a lift in inflation-capping productivity.
Chart: Our multi-asset-views

Thematic Insights

Five investment essentials for a post-pandemic world

With some luck, and a bit of hope, we are cautiously optimistic that 2022 should be the year in which most of the world begins to move towards a post-pandemic era — albeit after many fits and starts along the way. From a public health perspective, COVID vaccination rates and other telling numbers (including case counts, hospitalisations and virus-related deaths) suggest that the life-altering global pandemic may finally be poised to start winding down. In addition, many world economies are growing and appear to be on a path to recovery from the unprecedented COVID shock.      

To be clear, we are not out of the woods just yet. The virus, with its multiple potential variants and its ability to “break through” vaccine-induced immunity in some cases, has proven difficult to entirely vanquish. And even if (as we expect) next year does bring meaningful progress, it’s critical to stress that it will not be a truly “post-COVID” world in 2022, as the virus will most likely remain in global circulation for years to come. Nor will the economic and other improvements we anticipate be sudden or universal. Many countries still lack adequate vaccine coverage, whether due to ongoing supply issues or vaccine hesitancy among their populations. And lingering challenges around international travel and other activities we took for granted pre-COVID may well persist for the foreseeable future, making a full reversion to completely “normal” conditions an uncertain prospect anytime soon.

Nevertheless, barring a virus mutation that renders the vaccines ineffective, or some other unexpected plot twist, 2022 will hopefully mark the start of a long-overdue global rebuilding process.

Authored by
Nanette Abuhoff Jacobson
Nanette Abuhoff Jacobson
Global Investment and Multi-Asset Strategist
Daniel Cook, CFA
Investment Strategy Analyst
Nick Samouilhan, PhD, CFA, FRM
Multi-Asset Strategist
Andrew Sharp-Paul
Investment Director