In this edition

With the UK’s fiscal policy easing, we look at the outlook for the economy and focus on sectors such as healthcare to explore exciting developments and the innovative technologies born out of Covid-19.

Investor Insights Autumn 2022

Hear from our experts

  • 03 Nov
  • 46 mins

Our in-house experts share our views on the future of the economy and the themes that matter for investors.

New era. New opportunities

2022 has proved a challenging year for markets and for the global economy so far. Asset markets have faced rising political risk, higher inflation, slowing growth and tightening monetary policy. Against this backdrop, both equities and bonds have suffered.

As 2022 draws to a close, Isabel Albarran, Investment Officer for Economics and Asset Allocation, looks to the year ahead and the opportunities and challenges investors face.

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Investment implications

In recent months, the challenges facing the global economy have intensified. With this in mind, overall we remain cautious in our outlook for equities, given the challenges presented by higher interest rates as well as weaker growth and geopolitical risk. This change is most pronounced in those areas of the equity market most exposed to the global economy, including Europe and emerging markets. Within bonds, we also remain cautious, given the prospect of monetary policy tightening further, but we now see greater value in this space, and selective opportunities.

Diversification remains a key pillar of our investment approach and alternatives continue to play an important role in portfolio construction. Recent volatility has been broad reaching and we continue to prioritise securities with low cross-asset correlation, and attractive inflation hedging characteristics.

As ever, we continue to focus on the long term prospects of businesses, favouring quality companies at attractive prices. The dramatic price action we have seen in 2022 presents an opportunity for investors to identify good businesses that have been brought down with the broader market.

Innovation in healthcare

We all hope that the worst of Covid-19 is in the rear view mirror, acknowledging the likely increase in cases over the coming winter months. Over the past few years, countries mobilised their efforts against the pandemic at a speed and scale previously unseen. On average it takes nearly ten years to develop a new drug or vaccine. It is truly remarkable then that the first Covid-19 vaccines were approved just 11 months after the virus structure was understood.

As investors in healthcare innovation, it was incredible to see that despite the lockdowns the research work within pharmaceutical companies never stopped. The pharma industry’s development pipeline has reached a new high of over 20,000 products under active development this year; an increase of nearly 25% since pre-Covid-19 levels. Although some of these products will not reach the market, there are exciting up and coming technologies that were born out of the pandemic.

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Important information

Any research in this document has been procured and may have been acted upon by Close Brothers Asset Management for its own purposes. The information is being made available to you only incidentally. The views expressed herein do not constitute investment, taxation or any other advice and are subject to change. They do not necessarily reflect the views of any company in the Close Brothers Group or any part thereof and no assurances are made as to their accuracy. Investments may not be suitable for everyone. Past performance is not a reliable indicator of future results. The value of investments and the income from them may fall as well as rise and is not guaranteed. An investor may not get back the original amount invested. Unless otherwise indicated, all information and opinions expressed in this document are those of Close Brothers Asset Management and are correct as of November 2022.

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