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Investment Tips for 2022 in Fixed and Variable Income

Basically, the best investment tips for this 2022 can be summed up in thematic investment, active management and  diversification .

In a year that is expected to be marked by inflation, interest rate hikes, war and post-pandemic uncertainty, where to invest?

Investment tips in fixed income 2022

After the economic opening, the price of energy began to trend upwards (a situation that has been aggravated by the invasion of Ukraine by Russia). In short, inflation (the number 1 enemy of fixed income) has taken center stage.  

Inflation is starting to be a problem . For this reason, the United States Federal Reserve has begun to make a move and start raising rates. From the European Central Bank they are somewhat more reluctant, although they are aware that they have to abandon such lax monetary policies (put an end to debt purchases).

Rising interest rates have an impact on bonds . The return on newly issued assets varies depending on how interest rates fluctuate, causing already issued bonds to fall in price on the secondary market. Consequently, these types of assets are the ones that will suffer the most.

Therefore, it is not advisable to expose yourself to duration risk. They do not rule out further rises in interest rates and the loss for holders of bonds issued in an environment of “0% rates” may be accentuated.

In this context, the investor must opt ​​for a good selection and maintain active management . These are times of change for fixed income. Short-term tactics and maneuvers are a good option.

In any case, despite not being the most convenient alternative at the moment, without a doubt, a certain amount of asset exposure is necessary because it provides added  stability to the architecture of the global investment basket.

Investment tips for 2022

Fixed income investment strategies for 2022

Emerging Fixed Income

In emerging fixed income investment processes, environmental, social and corporate governance (ESG) factors are deeply rooted in these processes. This is because we believe that a detailed ESG assessment can help us achieve better results and can promote return on investment.

Taking into account the variety of political systems in emerging countries, an environmental, social, governance and political framework needs to be developed to help us assess the specific risks associated with bonds issued by emerging governments.

Flexible fixed income

Flexible fixed income funds are a category in which carrying out a preliminary analysis and choosing funds is especially complicated, since there are enormous differences between them within the same group. Precisely, flexibility allows us to find funds with a duration of more than eight years, mainly the US and Australia, as well as others that are in liquidity or even maintain negative durations in the German bond.

Starting from this premise, it is first important, as in all cases, to know what your risk profile is, the time horizon of the investment and the liquidity you have or want to have.

Variable investment tips 2022

After the social changes that the coronavirus pandemic left behind, we are living in a time plagued by social changes. The patterns of consumption, work and production have been altered. To all this must be added a greater awareness of ESG criteria (environmental, social and corporate governance) by all agents (especially public bodies).

These reasons have given rise to the so-called thematic funds : those that do not take a sector or a geographical area as a reference, but are based on a long-term structural trend that will mark the future.

We are experiencing a turn in the functioning of the real economy, some sectors are experiencing a boom and have a series of competitive advantages that make your investment interesting .

An example of this is investment in disruptive technologies, which have made strong progress in times of pandemic. 

Some other topics that represent interesting “megatrends” would be:

  • Cryptocurrencies .
  • Artificial intelligence and robotics.
  • Digitization.
  • Cloud Computing.
  • Medical innovation.
  • Mobility and transportation.
  • Cybersecurity.
  • Sustainable food.
  • Population aging.

Below, we show some  investment strategies  in equities.

Equity investment strategies for 2022

Thematic investments

It is worth remembering that equities are not as sensitive to inflationary spikes as fixed income, but volatility still has the capacity to give us surprises during this 2022. Therefore,  effective management can do good in an income investment portfolio. variable.

As in any other scenario, portfolio diversification as an instrument to mitigate risk must prevail. At the sectoral, regional and asset level. The positive part of thematic funds is that they are not limited to a single sector (however, they may concentrate their portfolio in a few stocks).

Actions related to the energy transition, biotechnology and health care have a special appeal. 

In reality, the most classic strategies, such as value investing or traditional  investment in dividends , should represent a minority of the capital. By experiencing a change in society and the economy, “zombie” sectors can be created (those that will be outdated and will not enjoy competitive advantages).

Now, if possible more than ever, it is necessary to use investment funds to undertake this type of strategy, since it is common to see complex businesses and the intervention of a professional is required to analyze this type of investment .

Sustainable investments and energy sector

All sectors are betting on an orientation towards ESG criteria to continue having opportunities to raise capital and to remain competitive. We often see more companies incorporating these criteria into their processes.

Moreover , investment funds dedicated to the energy sector are currently offering attractive returns due to the opportunities generated as a result of the fight against global warming .

Actually, we could also consider sustainable investments as a theme with its own identity, but we prefer to distinguish them given the strength of this investment trend (it is increasingly supported by legislation and policies at the international level). 

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