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Four Key Investment Trends for 2022 – International Banker

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By Valerie Hernandez, International Banker

With 2021 characterised as the comeback year from the pandemic, the world is crossing its fingers, hoping that the strong economic recovery can be sustained throughout 2022. With that in mind, next year will hopefully prove to be one of significant growth for a number of important industries, with plenty of opportunities for investors to enjoy.

Here we look at four investing trends that show exceptional promise for 2022.

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Sustainability

Whether it’s renewable energy, ESG (environmental, social and governance) themes or green finance (such as green bonds), the trend of investing sustainably has taken off considerably in recent years. The effects on sustainable, impact and responsible investment classes of expanding green-energy adoption and growing global awareness stemming from the pressures of key sustainability issues such as climate change, diversity and inclusion will be unequivocally positive in 2022.

Taking renewable energy as just one example of this bright outlook, the International Energy Agency (IEA) found in May that annual renewable-capacity additions in 2020 increased by 45 percent to almost 280 gigawatts (GW), the highest year-on-year increase since 1999. And even more astonishing is the IEA’s projection that with exceptionally high renewable-capacity additions becoming the “new normal” this year and next, renewables will account for 90 percent of new power-capacity expansion globally. “Solar PV development will continue to break records, with annual additions reaching 162 GW by 2022—almost 50 percent higher than the pre-pandemic level of 2019,” according to the IEA. “Global wind capacity additions increased more than 90 percent in 2020 to reach 114 GW. While the pace of annual market growth slows in 2021 and 2022, it is still 50 percent higher than the 2017-2019 average.”

And with November’s COP26 (26th UN Climate Change Conference of the Parties) conference in Glasgow, Scotland, providing the world with a snapshot of the progress being made across several sustainability issues, investment managers will be keen to push ESG themes further as part of their fund-allocation processes. According to French bank BNP Paribas, factor investing—targeting specific drivers of returns across asset classes—will be crucial in supporting successful investing in this area. “ESG integration in factor investing intends to improve the ESG features of the portfolio while keeping the factor exposure at a very high level,” Stanislas Mesland, head of equities strategies for BNP Paribas’ Quantitative Investment Strategies team, explained. “It enhances our offer by considering not only companies’ financial related metrics but also non-financial ones, to enhance the stock selection. Our research shows that by combining factors and ESG, investors can improve long-term performance, reduce risk and increase diversification.”

Electric vehicles

The boom in sustainable investing will also extend to connected markets, with electric vehicles (EVs) perhaps best positioned to capitalise. Indeed, EVs represent a crucial mechanism for governments, industries and consumers to reduce their carbon footprints and meet formal and personal clean-energy goals.

The Paris-based International Energy Agency (IEA) noted earlier this year that around three million new electric cars were registered in 2020, which was an all-time record and 41 percent more than in 2019. “While they can’t do the job alone, electric vehicles have an indispensable role to play in reaching net-zero emissions worldwide,” Fatih Birol, the IEA’s executive director, stated. “Current sales trends are very encouraging, but our shared climate and energy goals call for even faster market uptake.”

In its outlook for 2022, EV-charging company Virta expected 6.4 million vehicles (both EVs and plug-in hybrid-electric vehicles, or PHEVs) to be sold globally by the end of 2021, a massive 98-percent increase over 2020’s figures. “The year 2020 was already a major leap forward in terms of electric vehicle sales. 2021 is a whole new story. The market is growing. It’s growing fast. And it’s growing everywhere,” the company stated.

Indeed, next year should see a wave of new EVs coming onto the market. “Lucid is on track to deliver thousands of its ultra-premium Lucid Air in 2022. NIO is expanding into Europe for the first time ever. The Fisker Ocean is expected to hit the market in late 2022. BMW and Audi are launching a whole new fleet of premium EVs in 2022. The Rivian pickup truck will make some waves. Canoo’s lifestyle van is expected to start deliveries,” said Luke Lango, InvestorPlace’s senior investment analyst, in early October. “There’s a lot on the EV docket in 2022. And that’s why we’re pounding on the table about EV stocks right now. We think investors have a generational opportunity to buy high-quality EV stocks at a huge discount before they go on a huge run in 2022-plus.”

Artificial intelligence (AI)

Although still largely in an evolutionary stage, it seems likely that AI will make significant progress in 2022, positioning itself as arguably the most important and influential of the new wave of technologies currently transforming the world. Almost every major industry in every corner of the world is leveraging AI and increasingly intelligent machines to either complement the work being done by humans or replace it outright by providing a superior level of competency.

Chatbots are helping banking customers sort out their financial affairs, doctors are using AI to diagnose patients more accurately and make predictions about their future health, and companies across all sectors are utilising machine algorithms to detect cybercrime patterns.  

According to a recent survey from Gartner of technology and service providers with plans to invest in AI, one-third said they expected their investments to top $1 million over the next two years. What’s more, 87 percent of the survey’s respondents who considered AI a major investment area believed that investment in AI would increase at a moderate-to-fast pace through 2022.

“Rapidly evolving, diverse AI technologies will impact every industry,” said Errol Rasit, managing vice president of emerging technologies and trends (ETT) at Gartner. “Technology organisations are increasing investments in AI as they recognise its potential to not only assess critical data and improve business efficiency, but also to create new products and services, expand their customer base and generate new revenue. These are serious investments that will help to dispel AI hype.”

And while the development and effective implementation of AI remains very much in its infancy, with technology adoption not always successful at this stage, the opportunity to invest in what is sure to be among the most transformative and consequential technology themes existing today cannot be ignored.

Cannabis

Perhaps not as obvious as other investment themes currently grabbing the headlines, the cannabis industry nonetheless shows immense scope for growth in 2022. Arguably the biggest driver for this growth is the wave of legalisation actions for adult use and medical purposes across the United States, including in important, heavily populated states such as Connecticut and New York.

In its “Cannabis Market Projections for US & Canada: July 2021” report, Seattle-based cannabis-industry analytics firm Headset expected the US cannabis market to surpass $30 billion in 2022, upgrading the company’s $28 billion estimate provided during the first quarter. The revision came mainly on the back of new legislative approvals allowing adult-use programmes in New York, New Jersey, Connecticut and New Mexico, as well as a medical programme in Alabama.

“Last quarter, we estimated that the US market would reach about $28 billion in annual sales by 2022. With the addition of several new cannabis markets (Alabama, Connecticut, and New Mexico), we now project that the US cannabis market will surpass $30 billion in 2022. There is not much change in the Canadian forecast for 2022, but this is to be expected since the market is fully legalized,” according to Headset’s report, which also projected that the cannabis industry would grow by 27.7 percent to $23.6 billion by the end of this year and by a further 29.3 percent to $30.5 billion in 2022.

According to Sami Toivola, the report’s leading data analyst, flower will account for the largest market share of retail marijuana in 2022 at 47 percent of all product sales (up from 42 percent this year), followed by vape pens and cartridges at around 22 percent of sales. Edibles, pre-rolls and concentrates will each make up about 10 percent of the market.

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U.S. securities regulator probes investment advisers over crypto custody

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By Chris Prentice

NEW YORK (Reuters) – The U.S. Securities and Exchange Commission is probing registered investment advisers over whether they are meeting rules around custody of client crypto assets, three sources with knowledge of the inquiry told Reuters.

The SEC has been questioning advisers’ efforts to follow the agency’s rules around custody of clients’ digital assets for several months, but the probe has gathered pace in the wake of the blow-up of crypto exchange FTX, the sources said. They spoke on condition of anonymity as the inquiries are not public.

Advisers managing clients’ digital assets typically use a third party to store them.

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SEC enforcement staff are asking investment advisers for details around what the firms did to assess custody for platforms including FTX, one of the sources said. The broad enforcement sweep, which has not been previously reported, is a sign the top U.S. markets regulator’s scrutiny of the crypto industry is expanding to more traditional Wall Street firms.

A spokesperson for the SEC declined to comment.

By law, investment advisers cannot have custody of client funds or securities if they do not meet certain requirements to protect the assets. One of these demands that advisers hold such assets with a firm deemed to be a “qualified custodian,” though the SEC does not hold any specific list or offer licenses to firms to become such custodians.

The SEC’s investigation signals the regulator is targeting a long-brewing issue for traditional firms that have sought ways to invest in crypto, attorneys told Reuters. The agency’s accounting guidance has made it too capital-intensive for many lenders to hold digital assets on behalf of clients, limiting options for advisers seeking custodians.

“This is an obvious compliance issue for investment advisers. If you have custody of client assets that are securities, then you need to custody those with one of these qualified custodians,” said Anthony Tu-Sekine, head of Seward and Kissel’s Blockchain and Cryptocurrency Group.

“I think it’s an easy call for the SEC to make.”

Under Democratic leadership, the SEC has made crypto a priority area for enforcement, nearly doubling the size of its crypto team last year. But the regulator is under fresh pressure to go after crypto in the wake of a series of bankruptcies across the industry and the unveiling of U.S. charges against FTX’s founder and former head, Sam Bankman-Fried, for allegedly committing fraud. He has pleaded not guilty.

Two of Bankman-Fried’s associates, former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang, have both pleaded guilty to defrauding investors and agreed to cooperate.

The SEC has also been probing FTX equity investors for details of their due diligence efforts when they invested in the crypto exchange.

(Reporting by Chris Prentice in New York; Additional reporting by Elizabeth Howcroft in London and Hannah Lang in Washington; Editing by Megan Davies and Leslie Adler)

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Nestle unveils $100 million Colombia investment to grow capacity

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BOGOTA (Reuters) -Global food giant Nestle is set to invest $100 million over the next three years in its Colombian operations, President Gustavo Petro said on Friday, part of his push to boost industrialization.

The Colombian leader outlined the announcement in a post on Twitter late Friday.

The new investment plan builds on $13 million already spent by the world’s largest food and beverage producer in the South American country, the government said in a statement, with the new funds to be focused on increasing production capacity and updating technology.

“Industrializing Colombia is essential if we want to get out of poverty,” Petro wrote on Twitter.

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Nestle did not immediately respond to a request for comment.

But the statement quoted its top executive for Latin America, Laurent Freixe, as saying that the plan will allow the company to strengthen its product portfolio as well as align with some of the government’s priorities, such as promoting youth employment.

(Reporting by Luis Jaime Acosta and Carolina Pulice; Editing by David Alire Garcia and Sandra Maler)

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Award-winning funds: Manulife Investment Management among top honourees from Fundata Canada

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C$ unless otherwise stated                                                                                                                                                        TSX/NYSE/PSE: MFC     SEHK: 945

Combined wins of 15 segregated funds,10 mutual funds and 2 ETFs earn Manulife Investment Management honours for 11 consecutive years

TORONTO, Jan. 27, 2023 /CNW/ – Manulife Investment Management was recognized by Fundata Canada for its performance in 15 segregated funds,10 mutual funds and 2 ETFs throughout the calendar year. With 27 funds earning FundGrade A+® Awards, Manulife Investment Management has been recognized with awards for 11 consecutive years, every year since the awards’ debut in 2012.

The FundGrade A+® Award is given annually to investment funds and managers who show consistent, outstanding, risk-adjusted performance through the year, based on up to 10 years of history. Achieving a FundGrade A+® Rating is an honour because only around 6% of the investment fund products available in Canada have received a FundGrade A+® rating.

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“I would like to thank and congratulate the portfolio management teams and our colleagues who have enabled us to be recognized today,” said Patricia Corcoran, Head of National Sales, Manulife Investment Management, Canada. “Given the volatility and challenging economic conditions of the past year, I’m particularly proud of our team’s achievements in receiving these FundGrade A+® ratings. We are committed to providing Canadians with diverse investment solutions that meet investor needs, and this recognition demonstrates our success.”

The following segregated funds, mutual funds, and ETFs were awarded Fundata’s FundGrade A+® rating:

* Segregated fund performance shown for GIF Select InvestmentPlus, MPIP Segregated Pools and Manulife RetirementPlus funds are for the front-end sales charge. For Ideal funds, the performance shown is for the no-load sales charge. Performance for the winning segregated funds is for the period ending December 31, 2022. The Manulife RetirementPlus and Manulife Ideal segregated fund contracts are no longer open to new deposits effective October 2022.

**The Fundgrade A+® award applies to an entire fund family, including every segregated fund product and series where a fund is available. This fund has been listed twice to highlight that it is available in both GIF Select and MPIP Segregated Pools contracts.

***Mutual fund performance shown is for advisor series.  Performance for the winning mutual funds is for the period ending December 31, 2022.

**** Performance for the winning ETFs is for the period ending December 31, 2022.

FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata.

Manulife Investment Management is a trade name of Manulife Investment Management Limited (formerly named Manulife Asset Management Limited) and The Manufacturers Life Insurance Company.  The Manufacturers Life Insurance Company (Manulife) is the issuer of Manulife Investment Management insurance contracts and the guarantor of any guarantee provisions therein. Manulife Mutual Funds are managed by Manulife Investment Management Limited.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund, ETFs and segregated fund investments. Please read the fund facts as well as the prospectus before investing in mutual funds, the ETF Facts as well as the prospectus before investing in ETFs and information folder, contract and fund facts before investing in segregated fund contracts. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds and ETFs are not guaranteed, their values change frequently, and past performance may not be repeated. Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. Manulife, Manulife Investment Management, the Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.

About Manulife Investment Management

Manulife Investment Management is the global brand for the global wealth and asset management segment of Manulife Financial Corporation. We draw on more than a century of financial stewardship and the full resources of our parent company to serve individuals, institutions, and retirement plan members worldwide. Headquartered in Toronto, our leading capabilities in public and private markets are strengthened by an investment footprint that spans 19 geographies. We complement these capabilities by providing access to a network of unaffiliated asset managers from around the world. We’re committed to investing responsibly across our businesses. We develop innovative global frameworks for sustainable investing, collaboratively engage with companies in our securities portfolios, and maintain a high standard of stewardship where we own and operate assets, and we believe in supporting financial well-being through our workplace retirement plans. Today, plan sponsors around the world rely on our retirement plan administration and investment expertise to help their employees plan for, save for, and live a better retirement. Not all offerings are available in all jurisdictions. For additional information, please visit manulifeim.com.

About Manulife

Manulife Financial Corporation is a leading international financial services provider, helping people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we provide financial advice and insurance, operating as Manulife across Canada, Asia, and Europe, and primarily as John Hancock in the United States. Through Manulife Investment Management, the global brand for our Global Wealth and Asset Management segment, we serve individuals, institutions, and retirement plan members worldwide. At the end of 2021, we had more than 38,000 employees, over 119,000 agents, and thousands of distribution partners, serving over 33 million customers.

We trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong. Not all offerings are available in all jurisdictions. For additional information, please visit manulife.com

SOURCE Manulife Investment Management

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