![]() dollar is likely to remain triumphant this year as it benefits from more hawkish central bank policy from the Federal Reserve than peers, according to analysts at Brown Brothers Harriman. The path of interest rates, meanwhile, will have a significant impact on stock return dispersion in terms of valuation in 2022, and the valuation tradeoff between sales growth and margins will remain a leading source of return dispersion, the bank said.ĭOLLAR TO EXTEND GAINS THIS YEAR AS FED READIES RATE HIKES (1215 EST/1715 GMT) However, rising input costs and labor inflation will pressure margins at many firms, Goldman said. In 2022, earnings and valuations will be key for how the S&P 500 (.SPX) and its constituents perform, Goldman said.ĭecelerating economic growth will limit sales gains for many companies, and stock return dispersion will be mainly seen via margins, which are likely to expand 40 basis points to 12.6%. Value managers performed better in 2021 with 56% outperforming their benchmark, above the historical average of 41%. That is below historical averages of 32% and 36%, respectively.Īctive managers typically lag when dispersion is below average and outperform when dispersion is high. However, most active fund managers failed to capitalize on the opportunity, with just 20% of core and 15% of growth mutual funds outperforming their benchmarks, the analysts including David Kostin said in a report. The dispersion of return last year, as measured as plus or minus one standard deviation around the average stock, was at 59 percentage points, which was modestly below the long-term average, but still robust, Goldman said.
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