In focus

Investment Horizons Summer 2022

We are pleased to provide our 16th edition of Investment Horizons, our North American perennial compilation of research articles inspired by our global client engagements. This year came in like a lion and never lost its shape as we continue to face volatility in the markets, ballooning inflation and of course the Russia/Ukraine war. In our midyear edition, we examine areas where investors may find opportunities amid all of the commotion.

We kick off our insights with a piece written in May of this year, on the fruits that fixed income may bear. While many of us expected turbulence in 2022 in anticipation of Federal Reserve rate hikes, none of us envisioned tremendous volatility across the fixed income universe in the first quarter. As we navigate the uncertainty that has weighed heavily on the markets, rest assured that the resulting volatility is exactly the environment in which our value approach thrives. Stay tuned for more updates coming later this year.

Next, two of our top managers in US small and mid cap equities describe why small cap stocks now garner their favor. US small cap stocks tend to source their revenues domestically, insulating them somewhat from global geopolitical disruptions. The small cap universe offers a wide variety of companies that may benefit from the strong domestic economic growth we are experiencing. Cheaper valuations and faster earnings growth offer a better entry point relative to US large caps. Furthermore, we share the opportunities we see as a result of the energy transition, including the potential for energy transition technologies to help solve many global issues. Renewed interest in energy security (in addition to broad decarbonization goals) further supports the need for the buildout of local, abundant, cheap, clean energy supplies. The driving forces behind the energy transition remain as strong as ever.

Moving from the “E” to the “S” in ESG, we remark on the positive social impact goals real estate investors can adopt without hurting financial performance. In fact, done the right way, it can improve risk-adjusted returns. How so? Read further to find out more. We round off this edition with a case study on “worker voice” – namely, an employee’s ability to communicate his/her views and influence management.

As always, we hope you enjoy reading this edition. If there are any other topics of interest to you, please contact your Schroders representative.

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.