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6 trending investments in 2022
The investment outlook seems to be worsening with the perfect storm that has been brewing recently: the war in Ukraine, inflation that seems to be here to stay, supply chains constraints and a pandemic that shows no sign of abating. But that doesn’t mean that you should shy away from investing. Here are the 6 trending investments in 2022, and how you can invest in a down market environment.
How to invest in times of inflation
As the saying goes, every crisis is an opportunity, and this one is no exception. This breeding ground for instability has challenged what has been achieved so far: some areas of investment are now more attractive, and "safe havens” are now being looked at from a different angle.
For now, Europe appears to be the region most exposed to stock market volatility, but no country is safe from the collateral damage of the war. Disruptions in supply chains are taking place across the world and debt levels are rising. Moreover, whatever central banks decide to do will have a direct impact on the where inflation goes from here and, consequently, on stock market performance. Add to this mix the effects of the pandemic still being felt in the global world economy and it is easy to see that the market is anything but stable.
This atmosphere can make even the most seasoned investors nervous. Risk management is particularly challenging in this new market, where prudence is more important than ever. However, uncertain times also present opportunities to generate above-average returns from investments with upside potential. Some interesting sector-specific premises have emerged in 2022, such as energy or commodities, but it is always prudent to take risks and diversify the portfolio across different types of assets.
6 trending investment in 2022
When considering the trending investments in 2022, we should always bear in mind that the process is always a very personal one, meaning that an investment that is good for you may not be good for another investor. It is also important to seek expert advice and gather as much information as possible before investing. We will now look at the 6 investments that stood out the most in 2022 at different levels of risk.
1. Postal savings certificates
Postal savings certificates are one of the Euribor-linked investments. Although Euribor is detrimental to those who have a mortgage, it works in favour of postal savings certificates because the interest rate is calculated monthly on the basis of the 3-month Euribor + 1%, with a maximum of 3.5% and a minimum of 0%. Therefore, although their yield at the beginning of 2022 was very low, the E series, currently in force, offers a net interest rate of around 2.80% or 2%.
Postal savings certificates are public debt instruments, i.e. by subscribing to a savings certificate you lend money to the State, which in turn guarantees the payment of interest and the repayment of your investment. The minimum subscription amount is 100 euros and the maximum is 250,000 euros, for a period of 10 years from the date of subscription. The interest can be compounded, i.e. it is added to the existing value, thus generating a higher value in the next calculation.
2. Equities
Investing in equities can deliver good returns for investors, even in a broadly negative environment such as that of 2022. Given the current situation, the investments that have stood out the most have been in sectors that are able to reflect inflation in their prices, such as energy, real estate, healthcare or commodities. Before investing, it is important to choose a good financial intermediary to guide and facilitate your transactions. Even in sectors where investment is more favourable, the market is always volatile, so it is important to rely on professional assistance. Since you will be taking on a certain amount of risk, the experts at Banco Carregosa will be by your side to help you navigate the stock market and help you make the best decisions that are in line with your profile.
3. Equity, Bond and Mixed Funds
Equity, bond and mixed funds are other possible vehicles for dealing with unstable situations. By their very nature, they are more diversified, offering exposure to different stocks, bonds or both, and provide a minimum level of diversification. Still, investment funds, particularly equity funds, can be volatile in the short term, so you should invest for the long term in order to smooth out market swings.
The following funds stood out the most in 2022: energy funds such as the BlackRock Global Funds – World Energy Fund E2 (EUR) and the Franklin Natural Resources Fund N(acc)EUR, among the products offered by Banco Carregosa. The former has an annualised return of 34.65% in 2022 and includes shares in companies whose principal economic activity is the exploration, development, production and distribution of energy. The latter, with a one-year annualised return of 36.23%, invests mainly in natural resources assets in developed and emerging markets.
4. ETF (Exchange Traded Fund)
An ETF (Exchange Traded Fund) differs from other funds in that it can be traded on a stock exchange, just like investing in a company’s shares. In 2022, the best performing ETFs have energy exposure as a common denominator, with positive results driven by high oil and gas prices. Examples of ETFs include iShares U.S. Oil & Gas Exploration & Production ETF (IEO), up 51.63% in 2022, and the Fidelity MSCI Energy Index ETF (FENY), with an annualised return of 57.05% over the same period.
Banco Carregosa can help you invest in ETFs that allow this type of transactions. As this product may be difficult to understand, investors should always rely on an expert to advise their investment decisions.
5. Commodities
This asset class has seen a strong rise in value in 2022, especially oil and natural gas. Gold is also often chosen by investors as a hedge against inflation. It is usually seen as a safe haven investment in times of greater instability. The fact that commodities are not correlated to traditional asset classes such as equities and bonds makes them attractive.
6. Green energy
Renewable energies have emerged as an essential alternative in 2022, showing great potential and attracting public and private investment. Problems in gas and fuel supply arising from the war in Ukraine have accelerated the energy conversion initiatives in the industry, which were originally planned to reduce the environmental impact, but which have taken on a marked urgency to reduce dependence on Russian energy.
In addition, many thematic funds have recently emerged around the concept of decarbonisation, leading fund managers to systematically integrate sustainability into their strategy. As more and more governments and international organisations adopt regulations to combat climate change, this sector tends to be a promising one.
Banco Carregosa, supporting the best investments for each profile
Given the current situation, even the more seasoned investors will be forced to rethink their strategies. In this adverse environment, financial advisers can be of great help in determining the appropriate asset allocation according to each investor's profile. After all, not all funds fit all risk profiles and preferences. You can count on Banco Carregosa’s in-depth experience to help you develop a personalised investment strategy and optimise risk management. Contact our team to help you protect yourself from losses out and make decisions that will help you outperform the market.