Menu Our services in the selected location:
  • No services available for your region.
Select Location:
Select Location
    Remember my selection
    Your browser is out of date.

    Fundamental Equity

    2022 Top Equity Ideas

    With expectations of lower returns across asset classes, we believe investors will need more actively managed equities to meet their total return targets in the years ahead. In this changing macro environment, where inflation is likely to lead to rising interest rates, equity investors will need access to secular growth megatrends while navigating inflation. We highlight several strategies with potentially strong exposure to secular growth, discuss the growing importance of environmental, social and governance (ESG) considerations and explore the idea of using real assets and public equities as complements to private investments.

    The Beta Environment Is Evolving; The Active Environment Is Improving.

    Returns across all asset classes are likely to be lower than in recent years

    In 2022, interest rates are likely to rise and companies have higher margins and valuations than before; as a result, returns are likely to be lower. However, equities have historically outperformed inflation—and fixed income assets—and we believe this will be the case in 2022. 

     

    Source: Goldman Sachs Investment Strategy Group. Data as of December 31, 2021. See end note disclosure for additional details.

    We see new drivers of equity returns that we believe will create more opportunities for active managers to generate alpha.

    Rather than traditional factors such as growth vs. value, large cap vs. small cap or developed vs. emerging markets, we believe performance will be driven more by secular growth trends that play out at the company level. Disruption from technological innovation, demographic change and an increasing focus on sustainability is creating secular growth megatrends with winners and losers across sectors and regions. The message is clear: over time, disruptors have significantly outperformed companies vulnerable to disruption.
    Disruptors

     

    Source: Goldman Sachs Asset Management, FactSet, as of December 31, 2021. Secular growth themes include investment themes that have the potential to transcend business cycles and reflect the overall success or decline of an industry, including but not limited to clean energy, e-commerce, artificial intelligence and genomics. Past performance does not guarantee future results, which may vary.

    At the same time, we continue to believe that passive market cap-weighted strategies are too aggressive, leaving investors overexposed to companies on the wrong side of disruption as well as high concentration in some indices, notably the S&P 500, where the top five stocks—or 1% of the index—represent over 20% of the market capitalization.
    Active management

     

    Source: Goldman Sachs Asset Management

    Equity Investment Ideas For 2022

    We believe investors can benefit from taking an active approach that uses the widest possible opportunity set.

     

    Exposure to secular growth through four megatrends: Disruption from the spread of technological innovation, demographic changes around the world and an increasing focus on sustainability from governments, consumers and investors is playing out in four secular growth megatrends: technological advancement, the new age consumer, the future of health care and environmental sustainability.

     

    US small caps: Offering exposure to secular growth without the concentration risk in large caps, we expect US small caps to outperform the broader market. In addition to stronger earnings growth forecasts for 2022, US small caps have also typically outperformed large caps in rising interest rate environments.

     

    Emerging market equities: Despite higher expected growth and returns than most other regions, EM equities are trading near a 20-year low relative to US equities. We believe there is significant value in a dedicated active allocation, where the ability to own EM stocks that are not in the benchmark and participate in IPOs can potentially generate significant alpha in this inefficient market.

     

    China equities: We believe many investors are underexposed to the growth and strong alpha potential of the second-largest economy in the world. Importantly, active managers have consistently generated alpha over the past 10 years in the domestic China A-shares market, which investors can access through an allocation to China A-shares, China All Shares or EM.

     

    Sustainability and ESG: We believe environmental, social and governance (ESG) considerations will matter more to investment success because governments, corporations and consumers increasingly care about them. We believe an active, fundamental approach with scale, incorporating corporate engagement, is essential to providing a more informed view of ESG factors.

     

    Real assets and select public equities as a complement to private investments: We believe investors can potentially benefit from differences in the composition and characteristics of public and private markets by using an integrated approach to investing. Thematic funds with exposure to high secular growth and real assets are areas where public and private investments can be strategically complementary. Real assets also offer yields comparable to bonds but can benefit in an inflationary environment.

    Related Insights

    Disclosures

    Views and opinions expressed are for informational purposes only and do not constitute a recommendation by Goldman Sachs Asset Management to buy, sell, or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change, they should not be construed as investment advice.

     

    This material is provided for informational purposes only. It is not an offer or solicitation to buy or sell any securities.

     

    Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of principal may occur.

     

    THIS MATERIAL DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION WHERE OR TO ANY PERSON TO WHOM IT WOULD BE UNAUTHORIZED OR UNLAWFUL TO DO SO.

    Prospective investors should inform themselves as to any applicable legal requirements and taxation and exchange control regulations in the countries of their citizenship, residence or domicile which might be relevant.

    Economic and market forecasts presented herein reflect a series of assumptions and judgments as of the date of this presentation and are subject to change without notice. These forecasts do not take into account the specific investment objectives, restrictions, tax and financial situation or other needs of any specific client. Actual data will vary and may not be reflected here. These forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes. These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Goldman Sachs has no obligation to provide updates or changes to these forecasts. Case studies and examples are for illustrative purposes only.

    This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. This material has been prepared by Goldman Sachs Asset Management and is not financial research nor a product of Goldman Sachs Global Investment Research (GIR). It was not prepared in compliance with applicable provisions of law designed to promote the independence of financial analysis and is not subject to a prohibition on trading following the distribution of financial research. The views and opinions expressed may differ from those of Goldman Sachs Global Investment Research or other departments or divisions of Goldman Sachs and its affiliates. Investors are urged to consult with their financial advisors before buying or selling any securities. This information may not be current and Goldman Sachs Asset Management has no obligation to provide any updates or changes.

     

    United Kingdom: In the United Kingdom, this material is a financial promotion and has been approved by Goldman Sachs Asset Management International, which is authorized and regulated in the United Kingdom by the Financial Conduct Authority.

     

    European Economic Area (EEA): This material is a financial promotion disseminated by Goldman Sachs Bank Europe SE, including through its authorised branches ("GSBE"). GSBE is a credit institution incorporated in Germany and, within the Single Supervisory Mechanism established between those Member States of the European Union whose official currency is the Euro, subject to direct prudential supervision by the European Central Bank and in other respects supervised by German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufischt, BaFin) and Deutsche Bundesbank.

     

    Switzerland: For Qualified Investor use only - Not for distribution to general public. This is marketing material. This document is provided to you by Goldman Sachs Bank AG, Zürich. Any future contractual relationships will be entered into with affiliates of Goldman Sachs Bank AG, which are domiciled outside of Switzerland. We would like to remind you that foreign (Non-Swiss) legal and regulatory systems may not provide the same level of protection in relation to client confidentiality and data protection as offered to you by Swiss law.

     

    Asia Pacific: Please note that neither Goldman Sachs Asset Management International nor any other entities involved in the Goldman Sachs Asset Management (GSAM) business maintain any licenses, authorizations or registrations in Asia (other than Japan), except that it conducts businesses (subject to applicable local regulations) in and from the following jurisdictions: Hong Kong, Singapore and Malaysia. This material has been issued for use in or from Hong Kong by Goldman Sachs Asset Management (Hong Kong) Limited, in or from Singapore by Goldman Sachs Asset Management (Singapore) Pte. Ltd. (Company Number: 201329851H) and in or from Malaysia by Goldman Sachs (Malaysia) Sdn Berhad (880767W).

     

    Australia: This material is distributed by Goldman Sachs Asset Management Australia Pty Ltd ABN 41 006 09 9 681, AFSL 2 28948 (‘GSAMA’) and is intended for viewing only by wholesale clients for the purposes of section 761G of the Corporations Act 2001 (Cth). This document may not be distributed to retail clients in Australia (as that term is defined in the Corporations Act 2001 (Cth)) or to the general public. This document may not be reproduced or distributed to any person without the prior consent of GSAMA. To the extent that this document contains any statement which may be considered to be financial product advice in Australia under the Corporations Act 2001 (Cth), that advice is intended to be given to the intended recipient of this document only, being a wholesale client for the purposes of the Corporations Act 2001 (Cth). Any advice provided in this document is provided by either Goldman Sachs Asset Management International (GSAMI), Goldman Sachs International (GSI), Goldman Sachs Asset Management, LP (GSAMLP) or Goldman Sachs & Co. LLC (GSCo). Both GSCo and GSAMLP are regulated by the US Securities and Exchange Commission under US laws, which differ from Australian laws. Both GSI and GSAMI are regulated by the Financial Conduct Authority and GSI is authorized by the Prudential Regulation Authority under UK laws, which differ from Australian laws. GSI, GSAMI, GSCo, and GSAMLP are all exempt from the requirement to hold an Australian financial services licence under the Corporations Act of Australia and therefore do not hold any Australian Financial Services Licences. Any financial services given to any person by GSI, GSAMI, GSCo or GSAMLP by distributing this document in Australia are provided to such persons pursuant to ASIC Class Orders 03/1099 and 03/1100. No offer to acquire any interest in a fund or a financial product is being made to you in this document. If the interests or financial products do become available in the future, the offer may be arranged by GSAMA in accordance with section 911A(2)(b) of the Corporations Act. GSAMA holds Australian Financial Services Licence No. 228948. Any offer will only be made in circumstances where disclosure is not required under Part 6D.2 of the Corporations Act or a product disclosure statement is not required to be given under Part 7.9 of the Corporations Act (as relevant).

     

    Canada: This presentation has been communicated in Canada by GSAM LP, which is registered as a portfolio manager under securities legislation in all provinces of Canada and as a commodity trading manager under the commodity futures legislation of Ontario and as a derivatives adviser under the derivatives legislation of Quebec. GSAM LP is not registered to provide investment advisory or portfolio management services in respect of exchange-traded futures or options contracts in Manitoba and is not offering to provide such investment advisory or portfolio management services in Manitoba by delivery of this material.

     

    Japan: This material has been issued or approved in Japan for the use of professional investors defined in Article 2 paragraph (31) of the Financial Instruments and Exchange Law by Goldman Sachs Asset Management Co., Ltd.

    ​

    © 2022 Goldman Sachs. All rights reserved.  267027-OTU-1548922

    © 2022 Goldman Sachs. All rights reserved.

    Please enter your email address to continue reading.

    Confirm Your Access


    An email has been sent to you to verify ownership of your email address.

    Please verify the link in the email by clicking the confirmation button. Once completed, you will gain instant access to our insights.

    If you did not receive the email from us please check your spam folder or try again.

    Improving your experience


    We noticed that you have not opted into the Cookies that improve your experience. If you would like to receive insights and information which are more relevant to you, you can click the link below and opt-in to Cookies that improve your experience. Set your preferences here We use these cookies to understand website behaviour and to tailor the information we share with you.