Back to a volatile future

ID:

Wei Li

BlackRock Global Chief Investment Strategist

The three themes for our midyear outlook, “Back to a volatile future” are: Number one, bracing for volatility. Number two, living with inflation, and number three, positioning for net zero.

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Title: 2022 midyear outlook: Back to a volatile future

Our first theme is bracing for volatility. We have entered a regime of higher macro volatility and market volatility and that is here to stay. A goldilocks outcome of a sustained rally of both equities and bonds, that’s off the table.

Our second theme is living with inflation. We are in a world shaped by supply and the trade off between growth and inflation facing the Fed and other central banks is so much tougher in such an environment.

Our third theme is positioning for net zero. We believe investors can get exposure to the transition by not only investing in the “already green” companies, but also high-carbon companies with credible transition plans or are critical to the transitions.

The bottom line is we see persistently higher inflation amid shorter swings in economic activity. Through the course of this year, we have trimming portfolio level risk-taking and we do so again at this junction. And we also believe that in this environment, in this new regime, portfolios need to go through more dynamic and more frequent adjustments.

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Risk Warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

Important Information

In the UK and Non-European Economic Area (EEA) countries: this is Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

In the European Economic Area (EEA): this is Issued by BlackRock (Netherlands) B.V. is authorised and regulated by the Netherlands Authority for the Financial Markets. Registered office Amstelplein 1, 1096 HA, Amsterdam, Tel: 020 – 549 5200, Tel: 31-20-549-5200. Trade Register No. 17068311 For your protection telephone calls are usually recorded.

For investors in Switzerland: This document is marketing material.

For investors in Italy: For information on investor rights and how to raise complaints please go to https://www.blackrock.com/corporate/compliance/investor-right available in Italian.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

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© 2022 BlackRock, Inc. All Rights Reserved. BLACKROCK is a registered trademark of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.