What You Need to Know
- ETF and market experts Josh Brown, Dave Nadig, Eric Balchunas and Liz Young offer their outlooks.
- 2022 could be the year large-cap value makes a comeback like small-cap value did in 2021.
- It could also be host to crazier and wilder ETF products, Bloomberg's Balchunas says.
Ask just about any market strategist what’s in store for 2022, and there’s one word that keeps cropping up: “interesting.”
‘It will be an interesting year no matter what happens,” said Josh Brown, CEO of Ritholtz Wealth Management and renowned markets blogger, at a recent webinar on ETFs in 2022 sponsored by ETF Trends and Investopedia.
The setup for the coming year in markets is full of potential catalysts for market reactions: rising inflation, a central bank on the cusp of reversing years of accommodative monetary policy with rate increases, and stock valuations near historic levels.
In addition, there’s growing interest in investments focused on corporate responsibility to address climate change, social inequality and good governance, and in cryptocurrencies and related investment products.
Against that backdrop, Brown and several other ETF experts weighed in on their expectations for 2022 along with recommendations for ETFs in the webinar. Here are three of their top themes for 2022.
Value vs. Growth
In 2021, small-cap growth stocks gained only 2%, while small-cap value stocks soared 28%, but large-cap stocks did not experience that pattern, Brown said.
In 2022, it’s possible that large-cap value outperforms large-cap growth, according to Brown, who added that the large-cap value index is less concentrated, with a lot more sectors in leadership than large-cap growth.
“I wouldn’t be shocked if there was this huge rotation that continues,” Brown said.
Technology & Beyond
Tech stocks will continue to dominate in the U.S. stock market, but high-multiple tech stocks will be under pressure, said Liz Young, head of investment strategy at SoFi. She recommended that investors not bet against technology but be choosy about tech stocks, separating the top-heavy names from the rest of the sector.