Healthcare
James Douglas, Manager of Polar Capital Global Healthcare, said: “The near-term outlook for healthcare, and indeed the broader markets, may well be carrying some uncertainty due to the COVID-19 virus, but we have a high level of conviction that the healthcare industry will continue to innovate, work on improving access to care and use technology to drive efficiencies across the healthcare ecosystem.”
UK equities
Simon Gergel, Manager of The Merchants Trust, said: “Despite the risks from supply chain disruption, COVID-19 variants, rising inflationary pressures and higher taxes, the UK economy should continue to grow at a good pace in 2022 as interest rates stay low, the government spends on infrastructure, and consumers gradually return to more usual activity levels.
“The UK stock market is one of the cheapest in the world and remains highly polarised. This is providing excellent opportunities for stock pickers to identify strong businesses, trading at attractive valuations, which can deliver a high income and good total return over the long term.”
Alex Wright, Portfolio Manager of Fidelity Special Values, said: “UK equities remain significantly undervalued compared to global markets and reasonably valued in absolute terms. This has been reflected in a meaningful uptick in M&A activity, which has been a key contributor to performance for our funds. We are likely to see more bids if valuation discounts compared to overseas companies do not close.
“While the UK market has looked cheap over the past five years, the key differentiator compared to prior years has been that fundamentals on the ground have been strong. The removal of the Brexit uncertainty and the country’s swift vaccination rollout have contributed to the improved outlook.”
James Livingston, Partner of Foresight Group, said: “We expect the UK M&A market to remain buoyant in 2022, driven by the continued strong supply of private equity capital and interest from the US in UK assets. Throughout 2022, we expect to see a continuation of the demand for technology and healthcare assets, and there to be a focus on low carbon businesses. The UK government’s levelling-up agenda should see an increase in capital available for early-stage businesses in regions across the UK.”
Dan Whitestone, Manager of BlackRock Throgmorton Trust, said: “There remains an abundance of investment opportunities for us on both sides of the book and several new long and short ideas have entered the trust in recent months. We would also note that it seems company and industry fundamentals and the subsequent dispersion in financial outcomes in company updates are having a greater impact on share prices, which is a trend we believe will continue. We retain our high conviction in the fundamental strength of many of our differentiated investments and the power and enduring nature of many secular trends we are witnessing right now.”
Global equities
Zehrid Osmani, Manager of Martin Currie Global Portfolio Trust, said: “We continue to see a favourable backdrop for equity markets, as a result of ongoing loose monetary policies (even if they are on a path towards normalisation over the next two to three years), a low real interest rates environment, continued significant and still rising fiscal support, and a more prolonged positive economic cycle supported by sizeable infrastructure spending, given the more prolonged nature of such spending plans. We would therefore favour more cyclically exposed sectors and regions globally. Importantly, we believe that we are likely now moving from the recovery into the expansion phase of the economic cycle, where we would expect a broadening of market leadership and more emphasis being brought back towards stock picking.
“This will require a focus on companies that are able to deliver good earnings growth profiles and steady returns over sustained periods of time, rather than simply based on a sharp rebound from lows such as those seen in 2021 as a result of the post-pandemic crisis recovery. The shift in economic cycle from recovery into expansion is typically accompanied by a shift from accommodative monetary policies towards normalisation, which can usually bring a period of increased market volatility as interest rate expectations adjust.”
European equities
Stefan Gries, Co-Manager of BlackRock Greater Europe Investment Trust, said: “Looking forward to 2022 and beyond, it is important to stay selective, taking an approach that allows us to navigate the current environment while also capitalising on some of the exciting long-term investment opportunities that Europe has to offer.
“In our mind those include the fast pace at which our economies are digitising, decarbonisation of transport and the shift to electric vehicles, as well as the shift to more renewable fuels and ambitious targets to modernise our existing building stock. The European Union is committed to these future-proofing development projects, creating long-duration spending streams investors can gain exposure to in portfolios.”
