With markets at a 'crossroads' in 2022, investors should favor U.S. assets in their portfolios, particularly higher-quality equity classes, according to...
With markets at a “crossroads” in 2022, investors should favor U.S. assets in their portfolios, particularly higher-quality equity classes, according to Wells Fargo Investment Institute.
“Look for investor focus in 2022 to be on the Fed, which will have the difficult task of trying to keep policy rates low while economic growth and inflation rates remain at above-average levels,” the strategists said. “To this end, we expect the Fed to hike its target federal-funds rate sometime in the second half of 2022.”
Amid concerns over the spike in the cost of living in the pandemic, some investors may be considering Treasury inflation-protected securities, or TIPS, for protection. But “we caution against investing heavily in this asset class given that we view it as overvalued and TIPS yields have historically tended to rise , along with other fixed-income yields, while economic growth is strong,” the Wells Fargo strategists wrote.
The Russell 2000 index RUT, +1.21%, which measures the performance of U.S. small-cap stocks, gained about 14% in 2021, according to FactSet data. The Russell 2000 was trading about 1% higher Monday afternoon while the S&P 500 SPX, +0.64% was up about 0.5%.
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