As we look towards tomorrow, our macro viewpoint remains that this cycle will be different. The ongoing uncertainty linked to COVID-19 has meant looser fiscal and monetary policies for longer relative to history. Moreover, the global energy transition, coupled with excess consumer savings, is impacting the economic recovery in ways that are dramatically different than recent recoveries.
This cycle – more than ever – will favor thematic investors who are able to incorporate a top-down approach that champions both innovation and complexity amidst periodic dislocations to take advantage of the robust opportunity set we see unfolding.
Against this reflationary economic backdrop, we are focused on the following 2022 top-down themes for investors:
Pricing Power: Higher input costs and supply chain pressures have created an environment that strongly favors companies with pricing power, which leads us to expect a major valuation differential to emerge between price makers and price takers.
Collateral-Based Cash Flows: Given the unusual backdrop of rising cyclical inflation, more stimulus, and higher commodity prices, we believe that demand for collateral-based cash flows, including Infrastructure, Real Estate, and Asset-Based Finance, will accelerate more than many investors now think.
Digitalization and Decentralization: We are in an “innovation boom” and the pace of disruption only continues to accelerate. In particular, we believe that blockchain-driven decentralization is a cross-industry development that investors should watch closely.
A Return to Services: We believe that investors should consider increasing exposure to the service sector, which is likely to grow with consumers ramping up their exposure to “experiences” over the next 24-36 months. We are not bearish on goods, but some mean reversion in the services sector is likely to occur, we believe.
The Energy Transition: Environmental considerations are a major investment opportunity, particularly amidst growing concerns about supply chain resiliency. This mega theme is broad-based, and as such, we think that almost all aspects of Environmental, Social and Governance (ESG) factors are worth considering, including climate action.
Savings Bull Market: There are several important forces to consider that we think make savings an extremely compelling investment theme to pursue, including retirement products and financial planning linked to intergenerational wealth transfer.
As we look towards tomorrow, our macro viewpoint remains that this cycle will be different. The ongoing uncertainty linked to COVID-19 has meant looser fiscal and monetary policies for longer relative to history. Moreover, the global energy transition, coupled with excess consumer savings, is impacting the economic recovery in ways that are dramatically different than recent recoveries.
This cycle – more than ever – will favor thematic investors who are able to incorporate a top-down approach that champions both innovation and complexity amidst periodic dislocations to take advantage of the robust opportunity set we see unfolding.
Against this reflationary economic backdrop, we are focused on the following 2022 top-down themes for investors:
Pricing Power: Higher input costs and supply chain pressures have created an environment that strongly favors companies with pricing power, which leads us to expect a major valuation differential to emerge between price makers and price takers.
Collateral-Based Cash Flows: Given the unusual backdrop of rising cyclical inflation, more stimulus, and higher commodity prices, we believe that demand for collateral-based cash flows, including Infrastructure, Real Estate, and Asset-Based Finance, will accelerate more than many investors now think.
Digitalization and Decentralization: We are in an “innovation boom” and the pace of disruption only continues to accelerate. In particular, we believe that blockchain-driven decentralization is a cross-industry development that investors should watch closely.
A Return to Services: We believe that investors should consider increasing exposure to the service sector, which is likely to grow with consumers ramping up their exposure to “experiences” over the next 24-36 months. We are not bearish on goods, but some mean reversion in the services sector is likely to occur, we believe.
The Energy Transition: Environmental considerations are a major investment opportunity, particularly amidst growing concerns about supply chain resiliency. This mega theme is broad-based, and as such, we think that almost all aspects of Environmental, Social and Governance (ESG) factors are worth considering, including climate action.
Savings Bull Market: There are several important forces to consider that we think make savings an extremely compelling investment theme to pursue, including retirement products and financial planning linked to intergenerational wealth transfer.