Investment manager Quilter Investors surveyed nearly 300 advisers about 2022 prospects and found two thirds (66%) saw new variants and slow global vaccination as the biggest concern for markets in next year.

A further 19% predicted the biggest would be higher than expected inflation, while around one in eight (12%) were most concerned about strong economic growth failing to materialise or being very short lived. 

With the prospect of interest rate rises on the horizon and inflation a concern, just 4% believed a central bank policy error was the biggest risk.

The rapid spread of the Omicron variant has destabilised markets in recent days however, Quilter has urged advisers and investors not to overreact.

Danny Knight, head of investment directors at Quilter Investors, said: “While Covid is always going to be a concern while it is prevalent, Friday’s volatility and Monday’s quick recovery show that investors are increasingly coming to terms with life in the post-pandemic era.” 

“Indeed, the volatility witnessed is nothing compared to what we saw in 2020 and investors are becoming increasingly less concerned as to news of the next stage of the Coronavirus’ life cycle. This suggests that more fundamental market drivers such as company earnings, investor sentiment and the outlook for inflation and interest rates will play a far greater part in deciding how markets perform in the year ahead than the latest discoveries about the Coronavirus and its variants. 

“Advisers and investors need to be alert to other risks as the recovery plays out. All eyes are going to be on central banks in the early part of next year as higher inflation continues to take root. Much of the recovery now depends more on their next move than what happens with the Coronavirus, so one misstep could have serious ramifications for investors over the medium term.”

Quilter oversees £108.5bn in customer investments and provides financial advice, investment platforms, multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Affluent and High Net Worth. Affluent includes the Financial Planning businesses Quilter Financial Planning, the Quilter investment platform and Quilter Investors, the Multi-asset investment solutions business. High Net Worth includes the discretionary fund management business, Quilter Cheviot, together with Quilter Private Client Advisers.