Q1 2022 / Strategy Update

Investors are weighing a laundry list of unknowns in the current environment—how quickly the Fed will raise rates, whether and when inflation will moderate, how long Russia’s war will continue, whether the war escalates and turns global, and whether the pandemic is truly over. Our base assumption is that equity market volatility will continue as these questions continue to weigh on sentiment.

Higher inflation and higher long-term interest rates are likely to pressure valuations in certain areas of the stock market, which we believe could lead to greater dispersion in equity returns. Value looks better than growth and commodity-centric companies look to be in a strong position to grow earnings significantly ahead. We think our tactical shifts in 2021 have put us in a good position for 2022.