Healthcare will remain a key defensive investment strategy in 2022 amid rising inflation and higher interest rates, says Candriam.
Rudi Van den Eynde, global head of thematic equity at Candriam, said that while the energy and financial sectors saw significant inflows in 2021, the healthcare sector has acted defensively and this will become a significant advantage for investors as the year progresses.
Van den Eynde said: “We expect inflationary pressures to continue in 2022 as labour shortages put pressure on wages, commodities rise and globalization is somewhat dialled back, albeit in a limited way. This will require central banks to take action. Therefore, current investor appetite for strong performing sectors is likely to be disrupted by the realities of monetary tightening in combination with the winding down of government stimulus programmes introduced during the height of the pandemic.
“We don’t believe this will lead to an economic collapse but in the end the Fed has no choice but to cool down this economic boom as long-term inflation expectations cannot be derailed.”
Against this backdrop, the asset manager says defensive sectors, particularly healthcare, will benefit as their relative lack of economic sensitivity will be a strong pull for investors seeking to preserve returns and expects to see the sector return to strong performance during the second half of this year.
Van den Eynde added: “We are already seeing this take place for some of the big cap pharmaceuticals and the larger companies in our oncology strategy, who in general are holding up very well. In combination with some of the high growth names becoming more accessible again in terms of valuations, we see the sector being set up well for the future.”
