2021 Investment Outlook...Europe's Digital Economy...ARK Invest's Cathie Wood

[Goldman Sachs]( [BRIEFINGS] February 11, 2021 2021 Investment Outlook: ‘US Resilient’ Above: Sharmin Mossavar-Rahmani of Goldman Sachs In its 2021 investment outlook, Goldman Sachs’ Investment Strategy Group reaffirmed its long-standing themes of U.S. preeminence and the need for clients to stay invested in U.S. equities. “People might think that those two themes have outlived their value,” Sharmin Mossavar-Rahmani, chief investment officer of the Investment Strategy Group, says in a recent Exchanges at Goldman Sachs podcast. “And we're taking a very strong stand that, no, U.S. preeminence is intact, and clients should have the preponderance of their assets in U.S. equities and U.S. private equity.” At the core of that recommendation is a belief in U.S. resiliency, not only in terms of corporate management teams and their ability to weather the pandemic, but also in terms of U.S. institutions. “Rule of law, the role of Congress, the role of the Senate, the role of the presidency—these are strong institutions that no one person can derail or actually overcome,” Mossavar-Rahmani adds. “They can handle all kinds of people in all kinds of administrations and all kinds of pandemics, and eventually they recover.” [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=2021%20Investment%20Outlook%3A%20%E2%80%98U.S.%20Resilient%E2%80%99&body=https%3A%2F%2Fyoutu.be%2FSO7iJmWi4-8) The Daily Check-In With Goldman Sachs Above (L to R): Lisa Yang, Sally Pope Davis and Moran Forman of Goldman Sachs Europe’s digital economy is at a tipping point, according to [Lisa Yang]( of Goldman Sachs Research, who shares insights from her recent report in an episode of The Daily Check-In. “Europe, excluding the U.K., has been slower historically at adopting digital services such as streaming, e-commerce, or digital payments,” she says. “[But] we think the online penetration has dramatically accelerated with the pandemic last year, and a lot of new behaviors, we think, will stick.” Contributing to this shift, Yang says, is the growth of enabling technologies such as cloud computing and network infrastructure, as well as more robust sources of private and public funding. “And we're still in the early innings of this with only 20 to 25 percent of computer workloads happening in the cloud today,” she says. Yang also notes that digitization “has become a key political priority for Brussels, which is leading to a major push to create Europe's own digital champions.” In other episodes of The Daily Check-In, [Sally Pope Davis]( of the Asset Management Division explains why small-cap stocks are set to shine as macroeconomic tailwinds propel sector returns higher, while [Moran Forman]( of the Global Markets Division reflects on how the recent surge in retail trading has resulted in higher volumes, volatility and a change in the supply-and-demand dynamics among retail and institutional investors. For more Daily Check-In videos, [subscribe to our channel]( on YouTube. [Watch videos]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20With%20Goldman%20Sachs&body=https%3A%2F%2Fwww.youtube.com%2Fplaylist%3Flist%3DPLIyiGQywEp65ogt2Bi3vTK7ngXDTM6wT9) Talks at GS With Chef Marcus Samuelsson Above (L to R): Margaret Anadu of Goldman Sachs and Chef and Restaurateur Marcus Samuelsson As the pandemic upended the restaurant industry, chefs such as Marcus Samuelsson have reinvented—and reasserted—the roles those dining establishments can play in their communities. Samuelsson, co-owner of the iconic Red Rooster restaurant in New York, describes how he and other restaurateurs came together to create community kitchens in a recent episode of Talks at GS. “We served 225,000 meals between March 15 and October 15,” Samuelsson says. “We went from being restaurant workers to first responders, and I think in a different way, it was the most important year we’re ever going to live together at Red Rooster.” During the conversation, Samuelsson also discusses his new book, The Rise: Black Cooks and the Soul of American Food. “Blackness is vast and is highly layered and complex,” he says. “But our food is America's food, so let's take some pride and ownership in that.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Talks%20at%20GS%20with%20Chef%20Marcus%20Samuelsson&body=https%3A%2F%2Fyoutu.be%2FmgQvq1abNPw) Insights From Great Investors With ARK Invest’s Cathie Wood Above (L to R): Katie Koch of Goldman Sachs and Cathie Wood of ARK Invest As founder of ARK Invest, Cathie Wood says she and her team actively invest in innovation for one key reason: “Innovation solves problems...and we have a lot of problems right now.” In today's environment, that's translated to a focus on several key technologies, Wood tells Katie Koch on an episode of Talks at GS Presents: Insights From Great Investors, namely DNA sequencing, robotics, energy storage, artificial intelligence and blockchain technology. “They have all gained so much more traction during and because of the coronavirus than we could have ever imagined,” she says. “We believe they're on exponential growth trajectories already, [they're] just being compressed much more than we expected.” Wood also credits the success of her investing strategy to her unique team of analysts, many of whom came to ARK with non-financial backgrounds. “We have engineers, computer scientists and mathematicians,” she says. “The diversity of the team, I do consider that part of our secret sauce.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Insights%20From%20Great%20Investors%20with%20ARK%20Invest%E2%80%99s%20Cathie%20Wood&body=https%3A%2F%2Fyoutu.be%2FJgbSbl0jL-w) How Hospitals and Healthcare Systems Are Managing Their Financial Health The hospitals and healthcare systems that are critical to managing our health are also a significant part of the institutional investor landscape. We sat down with Paget MacColl, co-head of the Americas Institutional Client Business within Goldman Sachs Asset Management (GSAM), to discuss the results of GSAM’s 2020 Healthcare Diagnostic, an annual survey assessing the investment approaches and practices of 42 leading healthcare systems and hospitals across the U.S. representing more than $350 billion in investments. Last year was certainly a difficult year for institutional investors as they faced the challenges of the pandemic and market volatility. How did healthcare organizations fare? Paget MacColl: COVID-19 meaningfully impacted hospital systems both operationally and financially. Because hospitals and healthcare systems rely more heavily on their investment portfolios to fund growth than corporate and public plans, they were very focused on liquidity management early in the pandemic. But fewer respondents to our latest annual survey see liquidity shortfall as a top concern, possibly reflecting inflows from federal funding and credit facilities. More broadly, the pandemic has exposed challenges to hospital systems that are being addressed through a refined focus on liquidity management, dynamic investment decisions, as well as increased collaboration across the governance structure. Given that the challenging operating environment is likely to continue for some time, what’s top of mind for healthcare organizations this year? Paget MacColl: Based on our survey, healthcare organizations appear more bearish on the investment outlook, with at least 50% of respondents saying they were more worried about a greater number of risks—including operational pressures, geopolitical turmoil, recession and a failure to meet return objectives—than prior years. However, concern around a liquidity shortfall decreased slightly from last year, while concerns around the path of interest rates have increased. Given the increased concerns, how are healthcare systems thinking about their asset allocation strategies? Paget MacColl: Overall, organizations remain bullish on private markets and risk assets broadly as they seek to generate long-term investment returns. Similar to 2019, private markets remain a key focus and are one of the most likely asset classes to see increased allocations. Investors are notably more bullish on equities: 30% say that they plan to increase exposure in the year ahead, versus 18% in 2019. Allocations to cash and short-term securities are the most likely to decrease this year, potentially reflecting cash buffers and inflows following the CARES Act. Respondents also appear more bullish on hedge funds, with 76% indicating they will maintain or increase exposure, compared with 61% in 2019. What was interesting this year was that about half of respondents have implemented ESG into their investment program, a significant increase from 29% two years ago. The majority of those who have implemented ESG approaches chose to do so by integrating ESG factors into the investment process in search of better performance. [Read more Briefly Q&As]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=How%20Hospitals%20and%20Health%20Care%20Systems%20Are%20Managing%20Their%20Financial%20Health&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2Findex.html) Goldman Sachs Media Highlights CNBC - February 10 [Earnings Have Recovered to Pre-Covid Levels, Says Goldman Sachs’ David Kostin]( (3:01) Reuters - February 8 [Goldman Appoints Swati Bhatia, David Stark to Lead Roles in Consumer Banking]( CNBC - February 5 [January Jobs Numbers Were Weaker Than Expected, Says Goldman’s Hatzius]( (3:39) Bloomberg - February 4 [Don’t Fear Inflation, Bond Bull Market Isn’t Over, GSAM’s Swell Says]( (2:25) [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. 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