Where to invest in 2022?

The UK economy continues to recover at a rather fast pace. Pushed mainly by household consumption, it is poised to reclaim pre-pandemic levels sometime in Q1, 2022. In just less than two years - from trough to peak - it will have recovered. You see the importance of the statistic when you remind yourself of the four years it took the economy to recover lost ground following the past decade’s financial crisis. So, where to invest in 2022? We will be looking at what the UK economy is likely to offer. 

Best UK ETFs: What sectors will do well in 2022?

First Trust United Kingdom AlphaDEX Fund (FKU)

• Performance over one year: 23.9%; 
• Expense ratio: 0.80%; 
• Annual dividend yield: 2.39%; 
• Three-month average daily volume: 8,052; 
• Assets under management : $ 94.4 million.

FKU traces the NASDAQ AlphaDEX United Kingdom Index. The latter uses the AlphaDEX stock selection methodology grounded on growth and value factors. 75 stocks are selected from the NASDAQ United Kingdom Index. 

Sectors with the largest exposure in the fund are financials, consumer discretionary, and industrials - accounting for more than half of the fund’s holdings. 

FKU’s best three holdings: 

• Investec PLC, a banking and wealth management company; 
• Tritax Big Box REIT PLC, a real estate investment trust; 
• SEGRO PLC, a property investment and development company. 

iShares MSCI United Kingdom ETF (EWU)

• Performance over one year: 16.6%; 
• Expense ratio: 0.51%; 
• Annual Dividend Yield: 2.68%;
•  Three-month average daily volume: 2,453,383; 
• Assets under management: $2.8 billion. 

EWUtraces the MSCI United Kingdom Index. The latter measures the broader K equity market’s performance. The ETF offers exposure to mid and large-sized UK companies. The fund permits a blended strategy. There could be a mix of growth and value stocks. The largest sector allocations in consumer staples, healthcare, and financials. These makeup close to half of the fund’s assets. 

The EU’s best three holdings: 

• AstraZeneca PLC, a global pharmaceutical and biotechnology company;
•  Diageo PLC , a global alcohol, and beverage company; 
• Unilever PLC, a global consumer goods company. 

iShares MSCI United Kingdom small-cap ETF (EWUS)

• Performance over one year: 16.2%;
•  Expense ratio: 0.59%; 
• Annual dividend yield: 1.36%; 
• Three-month average daily volume: 17,114; 
• Assets under management: $106 million. 

EWUS traces the MSCI United Kingdom Small Cap Index. The latter plumbs small-cap equities’ performance, standing for the bottom 14% of the UK securities market. The ETF offers exposure to small publicly traded companies based in the United Kingdom.

EWUS’ best three holdings: 

• Rightmove PLC, the manager of an online real estate and property website; 
• Meggitt PLC, a maker of aerospace and defense products ; 
• Intermediate Capital Group PLC , a global alternative asset management company. 

What is the next big thing to invest in 2022?: UK Equities 

UK shares are still cheap. The consequences of Brexit have supposedly depressed the valuation of the British stock market. There can be little justification for the continuing valuation discounting. This has done little for UK-listed companies’ ratings. 

Consequently, UK-listed companies keep on being picked off by overseas private equity buyers as well as overseas industry peers. PrimeFin has valuable experience in assessing equities for clients. 

Invest in 2022: the convergence of many catalysts 

A broader re-evaluation could come from the banding together of catalysts. For example, there are activist investors attracted to low-valued FTSE 100 companies. 

There had been improvement strategies put in play by various companies long before this. GlaxoSmithKline and Shell are just two conspicuous examples. 

There’s every likelihood of boards being catalyzed to deliver on existing plans with even more urgency to keep activist investors at bay. 

It is reasonable to expect that as the UK leads in vaccination roll-out, it will be only a matter of months before market synergies are back to pre-pandemic levels. 

Invest in 2022: the UK is future-ready 

It is wrong to assert that the UK economy is tradition-based. It is as much grounded in technology, as well. 

Oxford Nanopore Technologies, the DNA sequencing specialist, is an instance. Drax, the leading British operator of coal-fired power stations, is boldly advancing towards its stated goal. Drax has vowed to be carbon negative by 2030. Its work with renewables so far has been extremely encouraging. 

British tech and energy stocks - not forgetting good old BP - are not to be neglected. 

Invest in 2022: the 2022 wish-list 

We would like to put our mobe in the following shares, come the New Year: 

• Burberry; 
• Lowe; 
• Kingfisher; 
• Balfour Beatty; 
• 3I Infrastructure; 
• Hays; 
• Page group; 
• Robert Walters, and 
• Sthree.  

Cost-effective trading is easiest with PrimeFin.

Conclusion 

You are looking for companies that are firing on all cylinders at the moment? We outlined your invest in 2022 options above. There are also safer investments like JD Sports Fashion and Croda International. Your choice is what investors are ready to buy at a premium. Innovation and consistency are the hallmarks of great performers on the UK scene. The Omicron scare will prove to be manageable, and it will be “Rule Britannia” once again.