How asset managers are positioning their portfolios for 2022
by SUNIL SINGH, ALI SHAFA-AMRI
Financial markets have constantly evolved over years, and have been on fire, particularly since the pandemic lows of 2020. Even though vanilla products like large-cap stocks have done extremely well in terms of generating returns, clients are on the lookout for some unique ideas.
Within the public markets space, interest predominantly lies in the high growth momentum technology names with anticipation of outsized returns over a short period of time. Another area of interest has been in OTC products like structured notes which offer customized payoffs.
More professional and sophisticated clients are eager on exploring private equity & debt, along with pre-IPO deals, which have been riding high on the back of ultra-loose monetary policies and abundant liquidity globally. We also notice quite a bit of curiosity around cryptocurrencies and NFTs.
Looking ahead into 2022, the focus is on diversifying into uncorrelated asset classes, like private debt, life settlement, and real estate. Clients are also willing to consider portfolio protection strategies through options and inverse ETFs, to ride any corrective wave. Risk assets would, however, continue to receive the biggest allocation.