InvestmentsDec 8 2021

Renewable energy infrastructure tipped to be 2022 winner

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Renewable energy infrastructure tipped to be 2022 winner
Qilai Shen/Bloomberg

Renewable energy infrastructure could be the best performing asset class of 2022, according to a survey of investment company managers.

The sector gained 18 per cent of managers' votes, followed by mid-cap equities, which attracted 17 per cent.

The Association of Investment Companies polled 20 investment company managers between November 8 and 30 this year.

When asked to predict the best performing region in 2022, 25 per cent of respondents selected the UK, with 20 per cent picking emerging markets, and the US and Asia ex-Japan receiving 15 per cent of the vote each.

Annabel Brodie-Smith, communications director at the AIC said despite the challenges of 2021, investment company managers are optimistic about the prospects for markets in 2022.

“Following the focus on climate change at Cop26, it’s encouraging that renewable energy is tipped to be the best performer in 2022,” she said.

“Of course, no-one has a crystal ball. Investors should focus on investing for the long term by creating a balanced portfolio which meets their needs – and, if in doubt, consult a financial adviser.”

When asked about the greatest cause for optimism in 2022, the threat from Covid receding gained 21 per cent of votes, with supply chain problems receding garnering 19 per cent.

Andrew Bell, manager of the Witan Investment Trust, said: “Assuming that (despite the new Omicron variant) the world is close to being able to live with Covid, 2022 should see a sustained period of reopening, economic recovery and gradual resolution of the supply chain frictions caused by politics and the pandemic. Equities where earnings exceed expectations should have a good year.

“For contrarians, the UK and emerging markets appear widely disliked and lowly valued. For the longer term, I would bet on the US growing faster than other developed economies, but its stock market reflects more good news than others and could be a wallflower in 2022. I expect commodities, renewable energy and healthcare to do well.”

The managers surveyed said their greatest fear was a rise in interest rates, with 20 per cent seeing this as the biggest threat to the stock market in 2022. Nine out of ten managers believe interest rates will go up next year.

However, despite 17 per cent saying the biggest threat to stock markets next year was a rise in inflation, 65 per cent said an extended period of inflation was unlikely.