The end of loose monetary policy is in sight . The rampant inflation currently charging across developed markets is giving central banks and wider markets plenty of food for thought . All roads lead to the Federal Reserve . How the US central bank and chair Jerome Powell act will determine the direction of travel for markets over the next 12 months . Move too quickly and the Fed will hamper the recovery ; however , move too slowly and the economy will overheat and the high levels of inflation will start to eat into savings .
While this is a daunting picture for investors , the majority remain relatively bullish on the overall outlook for the next 12 months despite the risks at hand . This is the message from the results of a survey of 105 investors conducted by ETF Stream and Amundi , which have partnered to better understand how investors are preparing for the next year .
There are a number of clear themes that shine through from the results , which are highlighted in this report . Interest rate rises are a given for the majority of investors , especially in the US , where the Fed is signalling as many as three hikes this year . Furthermore , for investors brave enough , emerging market equities could prove to be one of the plays of the year . After a torrid 2021 , the asset class could make a dramatic recovery as countries look to continue their recovery from coronavirus . The sell-off in China , in particular , also means investors are likely to be more country-specific with their emerging market allocations this year .
This report provides a snapshot of how investors are preparing their portfolios for the next 12 months , what they see as the key asset allocation decisions and how they see markets developing . Keep an eye out for Amundi ’ s outlook for the year and why climate and thematic ETFs continue to grow in popularity with investors in Europe .