Active fund managers lost outperformance opportunities in 2021, and investors should stay away from companies with more exposure to wage inflation, Goldman Sachs strategists wrote in a note, according to an article in Bloomberg.

Companies will start to see limited sales gains as economic growth slows down, making the skill to navigate interest rates and inflation vitally important for firms. Historically, the percentage of large-cap core mutual funds outperforming has been 32%, but last year it was only 20%. Meanwhile, just 15% of growth mutual funds outperformed their benchmarks, the article cites. But while the average value outperformance usually is 41%, it was 56% in 2021.

With little clarity on central-bank policy and how coronavirus variants will evolve and affect the economy, as well as mounting concerns over inflation, market forecasters are predicting high volatility in 2022. The Goldman Sachs strategists forecast margin expansion of 40 basis point to 12.6% for S&P 500 companies in their note, and added that interest rates will have a large impact, whichever path they take, “after sharp reversals in bond yields during 2021 drove large factor rotations within the equity market.”