Best funds to invest in 2022

With the pandemic, inflation and interest rates set to dominate the economic agenda in 2022, we look at some of the investment themes that could help you capture these trends and grow your portfolio.

Best funds to invest in 2022
Manish Vekaria
Manish Vekaria
14/1/2022

Where to find the best returns

With the pandemic, inflation and interest rates set to dominate the economic agenda in 2022, we look at some of the investment themes that could help you capture these trends and grow your portfolio.

Social welfare

We discussed some of the issues relating to environmental investments in a previous blog, but 2022 might be a good time to focus on the 'S' in ESG - social.

Companies are increasingly judged on their commitment to labour rights and not only how they deal with their own employees, but also how their suppliers treat their workers. Special focus is also placed on how these companies engage with the communities they operate in through redevelopment or community outreach.

As the pandemic forced people to work from home there has been a growing focus on employee wellbeing. Companies that support their staff rather than assuming they cannot be trusted to work on their own should outperform this year.

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Brexit bonus

Many analysts believe UK companies' share prices across many industries are undervalued because of concerns around the political and economic fallout from Brexit, suggesting that they are trading below their true value.

The level of interest overseas private equity firms and foreign competitors have shown in UK listed companies over the last 12 months would suggest that there is some truth in this view. Even 'new economy' businesses look cheap when compared to equivalent companies in other countries.

The Brexit negotiations are far from over. However, if these discussions take a more conciliatory tone in the coming months it is easy to see UK shares enjoying a rebound.

Home comforts

The performance of the UK housing market in 2021 may have been fuelled partly by the stamp duty holiday extension that expired in September, but all the indications are that 2022 will be another good year for real estate investment.

The end of last year saw prices rising at their fastest rate since before the global financial crisis and if workers return to offices in large numbers the urban rental market can expect to see strong growth. Conversely, the pandemic has encouraged many people to look at moving away from urban areas and much of this demand is yet to be fulfilled.

If you are looking to buy property directly rather than through a fund, just remember the old adage that you make money when you buy, not when you sell.

Banking bonanza

Borrowers will be watching the Bank of England closely over the coming weeks and months to see what it says and does about interest rates, with investors also paying close attention.

Any increase in rates is good news for the 'traditional' banks as it increases their opportunity to generate revenue on lending, which accounts for a larger share of their revenue than is the case for so-called challenger banks.

Some investors will have been burned on previous investments in the banking sector, but with lower than expected loan defaults boosting bank profits, it is a sector you cannot afford to ignore.

Key considerations

• Consider the link between how companies treat their staff and their financial performance

• Look for value in the share prices of UK listed companies

• Decide which area of the property market you are most comfortable investing in

• Watch the interest rate indicators closely when considering bank stock investment


Disclaimer: This is not financial advice, simply a financial opinion

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