Finding pockets of opportunity

The savvy investor will be able to source opportunities in a largely stagnant market, writes Robert Tomei, chairman and chief executive of private equity group Advanced Capital.

There is a general consensus that in 2012 the global economy as a whole will lean much more towards stagnation than recovery. The big winners over the next year of investment will therefore be those who successfully identify and commit to geographies and sectors with the potential to go against the general trend.

We expect ongoing volatility, and extremely diverse performance both within and between sectors. Success will come from correctly negotiating three stages; identifying areas with strong growth potential, picking out the strongest elements within that area, and then identifying skilled managers with access to the best opportunities.

It's a good time to define investment opportunities and growth trends more precisely; the European technology sector looks promising, but specifically industrial, efficiency-driving technology with a direct impact on companies' profit margins – rather than the more speculative cloud and social media sectors.

Emerging markets remain a huge opportunity, especially amidst the ongoing turmoil in Europe's financial markets, but geographically the frontier markets look more attractive than the pricier BRICs. In particular, the recent launch of several Africa-focused funds underlines the global interest in the various African markets which have exhibited consistently strong growth over the past decade. Within developing Asia, the consumer and luxury markets look to have huge growth potential.

There are several sectors which look like they could tip in either direction over the next year. There's still little consensus on where the market stands with regard to renewables – it's a sector we're holding off on for now, but we're keeping a close eye on future developments, particularly in Europe.

By contrast, the traditional energy sector continues to offer major investment opportunities, with a significant funding gap to be met over the coming decade. Similarly, a large funding gap in the distressed real estate market will make it a promising target.

Robert Tomei is chairman and chief executive of Advanced Capital.