RESEARCH // April 22, 2022
Quarterly Commentary Letter – Q1 2022: When the World Changed


The beginning of 2022 was a time of firsts.

War in Europe, inflation at 40-year highs, and the start of a monetary tightening cycle across major economies coincided to knock equity markets back and trigger a sharp correction in bond prices in Q1. The traditional bond market hedge against stock market declines did not work to safeguard portfolios.

Looking ahead, investor caution remains warranted. Opportunities can, nevertheless, be found. Russia’s shocking invasion of Ukraine has accelerated the energy transition that is urgently needed to address climate change, increasing the focus on sustainable investing. In addition to the clean energy space, investors can find opportunities in real estate, infrastructure, food and water related areas, and minerals, which will increasingly be in short supply.

Three macro themes emerged in Q1 that will dominate going forward: geopolitical tensions; inflation and monetary tightening; and a softening of the global economy.

Against this background, it’s clear that volatility across equity and bond markets will continue for the foreseeable future. At RockCreek, we’re mindful of cautious investor sentiment in this environment, even as we look for opportunities. We remain focused on long-term themes, diversification across asset classes, and robust portfolio positioning for a higher inflation, higher interest rate, slower growth world.

The dilemma for investors is determining what has been priced into the market and whether fundamental analysis will be rewarded in the long term. All signs point to markets being driven more by macro/thematic factors than at the single name level. This dampened the returns of even the strongest active managers during Q1. Looking forward, balancing portfolios across equity factors (value, growth, momentum, cyclical and non-cyclical) and being mindful that, in this market, there is no single silver bullet will be important.

The economic uncertainty and volatility that have been the hallmark of Q1 are likely to remain in the next few quarters. There are themes that will be long-term sources of return and diversification. For example, food and agriculture – part of the sustainable investments we have sought for many years – are looking even more attractive now. Recent events and, more importantly, expected future trends have highlighted the need for more investment in this sector, given increasing food prices; food security issues; and the need for new technology to improve the efficiency, sustainability, and effectiveness of agriculture. This has translated to ideas across the public and private space that can generate strong returns alongside positive impact.

The coming weeks will offer new data points from businesses’ future guidance on earnings calls. Investors should look out for data on inflation, inventories, manufacturing, and labor reports for insights into the eventual direction of the global economy and what it means for markets. Given the heightened uncertainty about global prospects, flexibility to pivot with new information will be rewarded. Many factors – US and UK central bank meetings, China’s continued struggle with Covid, military developments in Ukraine – may affect the longer-term direction of the sectors, geographies, and markets that investors need to consider.

Click here to read the RockCreek Q1 2022 Commentary Letter


Macro Review and Outlook

Spotlight: Food Prices

Sustainable Investing

Public Equities

Spotlight: China

Fixed Income

Public Credit

Private Credit

Private Equity

Real Estate

RockCreek Update


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