“The sectors that concern me are the ones that attracted a lot of speculative capital over the past 12 to 18 months … companies with zero profits that rely on strong markets to raise money”
NICOLAS PIQUARD,
HORIZONS ETFs
“I don’t think there’s a risk of recession in the next three to four years … [but] there’s going to be choppy and uneven trading here and there as investors digest the headlines on policy response to high inflation”
Candice Bangsund,
Fiera Capital
“PMIs should slow down after a blitz pace last year. I think growth, profitability, stability … those kinds of measures will start to play a bigger role. All the euphoric cycle is behind us”
Srikanth Iyer,
Guardian Capital LP
In Partnership with
Five questions investors need to consider in 2022
What’s in store for investors and their portfolios in 2022? Financial services company Horizons ETFs chaired a recent roundtable of industry experts who shared their thoughts on the year ahead
Read on
Jeff Lucyk
Horizons ETFs
Moderator
Candice Bangsund
Fiera Capital
Srikanth Iyer
Guardian Capital LP
Nicolas Piquard
Horizons ETFs
Industry experts
THE PAST couple of years have been tumultuous for investors, their portfolios and global markets in general, so there’s never been a better time to look at the predictions, possibilities and opportunities that are front of mind for industry experts.
Jeff Lucyk, senior vice president, head of retail sales at Horizons ETFs, chaired a recent roundtable tackling the five questions investors need to consider in 2022. Joining the discussion were Candice Bangsund (vice president and portfolio manager of global asset allocation at Fiera Capital), Srikanth Iyer (lead portfolio manager and managing director, head of i³ investments at Guardian Capital LP), and Nicolas Piquard (vice president, portfolio manager and options strategist at Horizons ETFs).
the fundamental tailwinds that have previously supported equities are deteriorating, and the downside risks may be starting to outweigh the potential for positives.”
And the impact of COVID-19 can still be keenly felt.
“Obviously,” Bangsund added, “the coronavirus continues to circulate globally, and, while we don't expect this to derail economic expansion, [as] each subsequent wave is less destructive from an economic standpoint, it does have the ability to weigh on investor sentiment [and] create a little bit of angst.”
It would seem, then, that cautious optimism is the byword here, as reflected in Iyer’s observations – he predicts that 2022 will not be “a bad year”, despite the markets being “more benign”.
“Our AI systems are showing growth normalizing at a pretty fast pace,” Iyer said. “But I would say PMIs should slow down in 2022 after a blitz pace last year. I think growth, profitability, stability, [and] all those kinds of quality measures will start to play a bigger role. All the euphoric cycle is pretty much behind us.”
In terms of the global stage, Iyer is confident that the US will be “the world's strongest major economy in 2022 … with emerging markets a little bit dicey, PMI stable, and the GDP growth rate better than most people expect.” And while the issue of inflation isn’t going anywhere – “inflation is real, and it isn’t transitory” – he insisted that “an accommodative Federal Reserve – without biting and chasing inflation – should be reasonably OK for the market to go sideways or normalize.”
2022: The big picture
With so many factors to consider, giving a general overview of expectations for the year ahead is no small feat. Yet there are big-picture patterns the experts consider worth looking out for.
“I think that 2022 is going to be a little bit more challenging from an equity market perspective,” Bangsund said, adding that while 2021 had a been great year for equities – “we're sitting near record levels here” – the last few months had seen a spike in volatility.
“It's going to be tough to replicate the returns that we've seen in 2021,” she said. “It would seem that
The inflation situation
The notion of inflation being “transitory” has often been expressed by Federal Reserve Chief Jerome Powell, yet, as Piquard pointed out, “Powell himself has thrown in the towel somewhat on that term … from his perspective, he was hoping he wouldn't be in the bind that he is today, which is raising rates in a very uncertain situation.”
That particular bind prompts the second question: will inflation continue to rise as the new year goes on?
It’s a sticky situation all round, in Piquard's view.
“Look at the situation for inflation around the world,” he said. “There are record electricity prices in Europe, [and] now, with
increasing carbon emission prices, we're going to see higher costs for producers. Fertilizers are another example: because of record prices, fertilizer producers had to shut down for a while, which meant higher food costs. A lot of inflation is translating to higher CPIs. But will raising rates really fix that? I really doubt it.”
While it could be easy to veer into doom-mongering given this scenario, the experts nonetheless remain optimistic that such obstacles can be cleared – or at least alleviated.
“The market is likely to be able to tolerate a little bit of tightening up until a certain point,” Bangsund said. “I don't think there's a risk of recession in the next three to four years … [but] I think there’s going to be choppy and uneven trading here and there as investors digest the headlines on policy response to high inflation.”
Iyer agreed. “I think we're going to go through some ups and downs,” he said. “Inflation protection has to come from some kind of supply-demand relationship. That relationship – and where the world needs to shift – is not written yet.”
Optimal opportunities – and the opposite
Amid uncertainty, however, it’s good to know that opportunities continue to thrive.
Which brings us to the third question: what exactly are the kinds of opportunities investors should be seizing upon in 2022?
Commodities, particularly within ESG investing, seem to remain a firm favourite.
“Green commodities – new commodities that will help us get to lower emissions, like lithium, copper, uranium and hydrogen – have decades’ worth of demand coming down the pipes,” Piquard said. “We’re going to be using coal and oil for a while still, but how much longer? Whereas these new commodities really have a tailwind effect.”
Iyer, on the other hand, was a little more hesitant, remarking that
there was going to be a change in the income levied from commodities, which would not be in as “steady a state” as in the past.
“There’s a battle going on between commodities – inflationary, a supply shock – and digital transformation, which is deflationary," he said. "But if you go along [with] deflation and inflation, and you get free cash flow on both sides and get a payout, I think you're pretty good to go for a couple more years.”
This all dovetails into the fourth – and opposite – question for 2022. What are the sectors of particular concern that investors should avoid?
“The sectors that concern me the most,” Piquard said, “are the ones that have attracted a lot of speculative capital over the past 12 to 18 months … companies that have zero profits and really rely on strong markets to raise money.”
This view was strongly echoed by Bangsund, who said growth was “pretty vulnerable” given the current “reflationary outlook”, and also questioned the stability of “traditional government bonds” while looking ahead.
“The risks are all tilting towards higher inflation,” Bangsund added. “This just reinforces the need to look elsewhere for income generation.”
Priming the portfolio
With all this in mind, it makes sense to focus on the final question: how can investors position themselves well and protect their portfolios in the year ahead?
While Bangsund mentioned “real estate, infrastructure, agriculture” as “terrific opportunities to provide income stability” and Piquard pointed out that “covered calls can benefit in a high- volatility environment”, Iyer took a more philosophical approach.
“Downsides, protection, quality, visibility, duration, risk, credit risk, counterparty risk … all of these things matter,” he said. “A little bit of understanding of how to stay vested in the stock market versus [simply] being invested in the stock market becomes much more relevant.”
$3.9 trillion
Growth in global ESG fund assets in September 2021 – up from $1.65 trillion at end 2020 and $1.28 trillion at end 2019
The rise of ESG funds
Inside the digital gold rush
Horizons ETFs Management (Canada) Inc. is an innovative financial services company offering one of the largest suites of exchange traded funds in Canada. The Horizons ETFs product family includes a broadly diversified range of solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs has more than $20 billion of assets under management and 104 ETFs listed on major Canadian stock exchanges.
Find out more
As senior vice president, head of retail sales at Horizons ETFs, Jeff Lucyk is responsible for managing and leading the sales team to identify new business opportunities and enhance the growth of the firm. He was formerly the vice president, national sales manager at Norrep Investments. He graduated from Brock University with an honours degree in business administration and holds the Chartered Alternative Investment Analyst (CAIA) designation.
Horizons ETFs
Jeff Lucyk
Candice Bangsund is vice president and portfolio manager of global asset allocation at Fiera Capital. She is a member of the Global Asset Allocation Committee, focusing on central banks and fundamental macro analysis, and actively participates in the development and communication of the company’s asset allocation strategy. Bangsund also serves as the global spokesperson for Fiera Capital on all economic and investment matters and is co-lead portfolio manager on the Fiera Diversified Lending, Diversified Real Estate, and Diversified Real Asset Strategies.
Fiera Capital
Candice Bangsund
Srikanth Iyer is lead portfolio manager and managing director, head of i³ investments, at Guardian Capital LP. He joined GCLP in 2001 to lead the development and implementation of i³ investments. Iyer's career in the financial services industry began in 1995, when prior to assuming his role at GCLP, he joined Global Value Investors in Princeton, New Jersey, and was responsible for a variety of portfolio management and financial engineering roles.
Guardian Capital LP
Srikanth Iyer
Nicolas Piquard is vice president, portfolio manager and options strategist at Horizons ETFs. He co-manages Horizons ETFs’ global line-up of covered call ETFs. Prior to joining Horizons ETFs, Piquard spent nearly 15 years as an institutional derivatives trader with Canadian and international brokerage firms. He specializes in quantitative strategies trading options volatility and relative value. He graduated from the University of Waterloo with a bachelor of mathematics and holds the Chartered Financial Analyst (CFA®) designation.
Horizons ETFs
Nicolas Piquard
In Partnership with
Five questions investors need to consider in 2022
What’s in store for investors and their portfolios in 2022? Financial services company Horizons ETFs chaired a recent roundtable of industry experts who shared their thoughts on the year ahead
Read on
Nicolas Piquard
Horizons ETFs
Srikanth Iyer
Guardian Capital LP
Candice Bangsund
Fiera Capital
Industry experts
Horizons ETFs Management (Canada) Inc. is an innovative financial services company offering one of the largest suites of exchange traded funds in Canada. The Horizons ETFs product family includes a broadly diversified range of solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs has more than $20 billion of assets under management and 104 ETFs listed on major Canadian stock exchanges.
Find out more
As senior vice president, head of retail sales at Horizons ETFs, Jeff Lucyk is responsible for managing and leading the sales team to identify new business opportunities and enhance the growth of the firm. He was formerly the vice president, national sales manager at Norrep Investments. He graduated from Brock University with an honours degree in business administration and holds the Chartered Alternative Investment Analyst (CAIA) designation.
Horizons ETFs
Jeff Lucyk
Candice Bangsund is vice president and portfolio manager of global asset allocation at Fiera Capital. She is a member of the Global Asset Allocation Committee, focusing on central banks and fundamental macro analysis, and actively participates in the development and communication of the company’s asset allocation strategy. Bangsund also serves as the global spokesperson for Fiera Capital on all economic and investment matters and is co-lead portfolio manager on the Fiera Diversified Lending, Diversified Real Estate, and Diversified Real Asset Strategies.
Fiera Capital
Candice Bangsund
Srikanth Iyer is lead portfolio manager and managing director, head of i³ investments, at Guardian Capital LP. He joined GCLP in 2001 to lead the development and implementation of i³ investments. Iyer's career in the financial services industry began in 1995, when prior to assuming his role at GCLP, he joined Global Value Investors in Princeton, New Jersey, and was responsible for a variety of portfolio management and financial engineering roles.
Guardian Capital LP
Srikanth Iyer
Nicolas Piquard is vice president, portfolio manager and options strategist at Horizons ETFs. He co-manages Horizons ETFs’ global line-up of covered call ETFs. Prior to joining Horizons ETFs, Piquard spent nearly 15 years as an institutional derivatives trader with Canadian and international brokerage firms. He specializes in quantitative strategies trading options volatility and relative value. He graduated from the University of Waterloo with a bachelor of mathematics and holds the Chartered Financial Analyst (CFA®) designation.
Horizons ETFs
Nicolas Piquard
In Partnership with
Five questions investors need to consider in 2022
What’s in store for investors and their portfolios in 2022? Financial services company Horizons ETFs chaired a recent roundtable of industry experts who shared their thoughts on the year ahead
Read on
Nicolas Piquard
Horizons ETFs
Srikanth Iyer
Guardian Capital LP
Candice Bangsund
Fiera Capital
Jeff Lucyk
Horizons ETFs
Moderator
Industry experts
As senior vice president, head of retail sales at Horizons ETFs, Jeff Lucyk is responsible for managing and leading the sales team to identify new business opportunities and enhance the growth of the firm. He was formerly the vice president, national sales manager at Norrep Investments.
He graduated from Brock University with an honours degree in business administration and holds the Chartered Alternative Investment Analyst (CAIA) designation.
Horizons ETFs
Jeff Lucyk
Candice Bangsund is vice president and portfolio manager of global asset allocation at Fiera Capital. She is a member of the Global Asset Allocation Committee, focusing on central banks and fundamental macro analysis, and actively participates in the development and communication of the company’s asset allocation strategy. Bangsund also serves as the global spokesperson for Fiera Capital on all economic and investment matters and is co-lead portfolio manager on the Fiera Diversified Lending, Diversified Real Estate, and Diversified Real Asset Strategies.
Fiera Capital
Candice Bangsund
Srikanth Iyer is lead portfolio manager and managing director, head of i³ investments, at Guardian Capital LP. He joined GCLP in 2001 to lead the development and implementation of i³ investments. Iyer's career in the financial services industry began in 1995, when prior to assuming his role at GCLP, he joined Global Value Investors in Princeton, New Jersey, and was responsible for a variety of portfolio management and financial engineering roles.
Guardian Capital LP
Srikanth Iyer
Nicolas Piquard is vice president, portfolio manager and options strategist at Horizons ETFs. He co-manages Horizons ETFs’ global line-up of covered call ETFs. Prior to joining Horizons ETFs, Piquard spent nearly 15 years as an institutional derivatives trader with Canadian and international brokerage firms. He specializes in quantitative strategies trading options volatility and relative value. He graduated from the University of Waterloo with a bachelor of mathematics and holds the Chartered Financial Analyst (CFA®) designation.
Horizons ETFs
Nicolas Piquard
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Copyright © 1996-2022 Key Media Pty Ltd
Commissions, management fees and expenses all may be associated with an investment in exchange traded products (the "Horizons Exchange Traded Products") managed by Horizons ETFs Management (Canada) Inc. The Horizons Exchange Traded Products are not guaranteed, their values change frequently, and past performance may not be repeated. The prospectus contains important detailed information about the Horizons Exchange Traded Products. Please read the relevant prospectus before investing.
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Digital transformation is an area to watch
Sources: Stravium Intelligence's ;
financesonline.com
Increase in the global cryptocurrency market value from March 2020 to February 2021
900%
Total annual return of Horizons Big Data and Hardware ETF (HBGD) in 2021 (see disclaimer)
57.51%
Estimated value of cloud computing market by 2025
$832.1 billion
Analytics Insight
ESG funds are a prime opportunity, say the roundtable experts
7,487
Number of global ESG funds in September 2021 – up from 4,153 at end 2020
$3.4 trillion
Value of sustainable assets under management of ESG funds in Europe in September 2021 (or 88% of global value)
This view was strongly echoed by Bangsund, who said growth was “pretty vulnerable” given the current “reflationary outlook”, and also questioned the stability of “traditional government bonds” while looking ahead.
“The risks are all tilting towards higher inflation,” Bangsund added. “This just reinforces the need to look elsewhere for income generation.”
Priming the portfolio
With all this in mind, it makes sense to focus on the final question: how can investors position themselves well and protect their portfolios in the year ahead?
While Bangsund mentioned “real estate, infrastructure, agriculture” as “terrific opportunities to provide income stability” and Piquard pointed out that “covered calls can benefit in a high- volatility environment”, Iyer took a more philosophical approach.
“Downsides, protection, quality, visibility, duration, risk, credit risk, counterparty risk … all of these things matter,” he said. “A little bit of understanding of how to stay invested in the stock market versus [simply] being invested in the stock market becomes much more relevant.”