The fortunes of growth and value stocks differed significantly in 2022’s first three months, FE fundinfo data shows, as investors faced a very uncertain market backdrop. 
Stocks and bonds both declined during the opening quarter of 2022 as investors worried about rising interest rates and the conflict in Ukraine, although strong rises were seen in pretty much all commodities.
Below, Trustnet looks at the market from a range of viewpoints, including regions, investors styles and individual commodities, to find out where the biggest gains and losses were seen.
Asset classes
Conventional assets such as equities and fixed income put in a lacklustre showing during the opening three months of the year, with the MSCI AC World index down 2.6% and government bonds shedding 3.5%.
Bonds face a headwind from surging inflation and the pressure it puts on central banks to lift interest rates, with the Federal Reserve and the Bank of England being among those at the start of a rate-hiking cycle. Stocks, meanwhile, have suffered from heightened nervousness caused by the Russia/Ukraine war and its likely impact on global growth.
Performance by asset class in Q1 2022
Source: FE Analytics. Total return in sterling between 1 Jan and 31 Mar 2022
Much stronger moves were seen in commodities, reflecting the effect of many post-lockdown supply bottlenecks and the West’s sanctions on Russia. Russia is a major exporter of many key commodities, including gas, oil, aluminium, nickel, lead, cobalt, copper, wheat and corn.
Geography
When looking at how equity markets performed in 2022’s first quarter, the most striking part of the chart is the 100% fall in the MSCI Russia.
MSCI reclassified Russia as a standalone market at the start of the conflict, removing its emerging market status. International sanctions and restrictions on trading Russian stocks means that many investors have written down their Russian holdings to zero.
Performance by geography in Q1 2022
Source: FE Analytics. Total return in sterling between 1 Jan and 31 Mar 2022
Most equity indices examined here posted small losses over the three-month period, with exceptions being the FTSE All Share eking out a tiny gain and China falling more than 10% as re-introduced lockdowns to tackle new Covid infections.
Brazilian equities surged closed to 40%, however, thanks to the tightness in global commodity markets and its position as an exporter of many key raw materials.
Commodities
With commodities being such a big part of the market narrative at the moment, we’ve included as many as possible in the chart below to show just how strong the price rises have been in recent months.
Performance of commodities in Q1 2022
Source: FinXL. Total return in sterling between 1 Jan and 31 Mar 2022
As can clearly be seen, energy commodities have surged the most, reflecting a jump in demand over the past year (a cold winter in Europe ran down gas stores, while Asia used more gas for air-conditioning during hot weather) and tighter supply in part because of the Russia/Ukraine conflict.
Industry, investment style and market cap
After seeing the above chart, it should come as little surprise that energy stocks were the best performing part of the equity market during 2022’s first quarter: while the broad MSCI AC World index was down 2.6%, the MSCI AC World Energy index jumped close to 25%.
Performance by industry in Q1 2022
Source: FE Analytics. Total return in sterling between 1 Jan and 31 Mar 2022
The worst performing areas of the market were both knocked by rising inflation and interest rates: consumer discretionary stocks, which tend to do well when consumers have money to spare but face headwinds when a weak economy or strong inflation hampers confidence and spending power, and information technology businesses, which as growth stocks are hurt when interest rates go up.
This brings up how the various investment styles held up over the three months under consideration.
Performance by investment style in Q1 2022
Source: FE Analytics. Total return in sterling between 1 Jan and 31 Mar 2022
Growth stocks had the worst quarter: they had a meteoric rise when rates were at historical lows as investors were more willing to pay a premium for future earnings, but have tumbled as the tightening of monetary policy turned this dynamic on its head.
Value stocks, on the other hand, tend to behave in the opposite manner to growth – they outperform when inflation is rising and interest rates are going up, as investors look more at their present earnings rather than their expected earnings.
Performance by market cap in Q1 2022
Source: FE Analytics. Total return in sterling between 1 Jan and 31 Mar 2022
Turning to market capitalisation, bigger companies had the best quarter but there wasn’t much in it and the MSCI AC World Large Cap index was down 2.4% with small- and mid-cap stocks losing slightly more.
Putting the above together, FE fundinfo data shows that value indices of all market capitalisations made a positive return last quarter, with the MSCI AC World Large Value index leading the way with a 2.3% return.
Performance by investment style and market cap in Q1 2022
Source: FE Analytics. Total return in sterling between 1 Jan and 31 Mar 2022
All the growth indices, however, made a loss with MSCI AC World Mid Growth putting in the worst showing after falling 8.8%.