Scenario and asset allocation for 2022
Asset allocation
- Softer growth Equities: neutral gaining from growth increased flexibility at this stage of cycle
- Higher inflation Bonds: caution advised Give priority to credit (growth) over duration (inflation)
- Lower liquidity injections Alternative investments: Overweight for yield and protection
1
Protection
- Loss of protection supplied by sovereigns Gold: in case of higher risk aversion and/or inflation
- Higher volatility/insurance Direct hedging strategies for equities
- Diversification/yield Hedge funds : defensive strategy
2
Income generation
- Low but rising sovereign yields Chinese sovereign bonds
- Positive economic climate Credit risk targeted: high yield, hybrids, Rising Stars
- Diversification Uncorrelated structured products (e.g. dispersion)
3
Capital gains
- Economic climate Equity investing style: more ‘value’ to gain from rate rises
- Growth boost Equity mega trends: to capitalise on long-term growth
- High potential Private Equity: innovation, 1 restructuring, value enhancement
4
