Themes to Watch in 2022

Key Observations

  • Inflation, a tightening Fed, and geopolitical tensions have placed the stock market on edge in the early days of 2022. Targeted buying of investment themes with strong growth potential may help.

  • The pace of investment and innovation that traditionally propels the growth of thematic funds remains strong—and could surpass inflation.

  • Among the top themes worth following in 2022:

    • Green energy and clean technology

    • Smart factories and automation

    • E-commerce

    • Genomics and biotech

The Case for Thematic Opportunities

The U.S. economy appears on solid ground, but the market’s recent pullback highlights key risks. Rising interest rates could put downward pressure on valuations for the S&P 500 and other broad-based stock market indexes in 2022. Stubborn supply chain challenges, the unwinding of the Fed’s balance sheet, and, of course, the myriad problems arising from the global pandemic may present investors with formidable challenges. Given this backdrop, the ability to identify specific themes or assets with growth potential as an enhancement to a diversified investment portfolio becomes even more appealing.

So, why might investors want to consider a thematic approach in the current environment?