13 Sep 2011 10:41

Investment Outlook, September 2011: Investor strategies in troubled times - a risky balancing act

There are more factors than usual for investors to keep in mind before deciding where to put their money, despite relatively low valuations in the stock market. "Is it time to buy?" is a highly individual question with individual answers. SEB's main scenario is that the economic upturn will continue but at a slower pace.

 

Equities and private equity still have the best potential for returns in a 1-2 year perspective. But the risk level is rising, and the voyage ahead may include a lot of rough seas with violent movements between peaks and troughs. For risk-averse investors, hedge funds, High Yield bonds and to some extent commodities are better choices, according to SEB's latest issue of Investment Outlook, a wide-ranging guide to the current investment climate. 

 

"We have reached a situation where investors have to ask themselves whether capital or returns should be their main focus. And this will be a balancing act, where the simple truth is that yesterday's truths are today's untruths," says Hans Peterson, Global Head of Investment Strategy at SEB Private Banking.

 

The old "buy and hold" strategy, in which equities were regarded as the only stable source of returns, is no longer valid. Given today's volatile stock markets and the risks that fluctuations bring, we must be completely aware of why we own shares and what purpose they serve in the portfolio we are managing. General "truths" - for example that global equities "always" return 7-8 per cent annually - are gross simplifications and to some extent pure lies. It often requires unreasonably long periods of time for such a statement to prove correct.

"Financial investors are facing completely new challenges: the new cyclical pattern, the fact that the economic policy toolkit is almost empty - forcing countries to resort to unconventional monetary policies - and the fact that emerging markets as a global economic engine are sensitive to reduced risk appetite. Taken together, this is a completely new concoction. The report presents our view of the situation and how investors should act," Mr Peterson says.


Investment Outlook gives the reader an in-depth look at the investment climate for seven asset classes, along with suggestions and advice on current risks and opportunities in the art of investing. The report can be read in its entirety at http://newsroom.seb.com/en.  

 

For further information, please contact

Hans Peterson, Global Head of Investment Strategy, SEB Private Banking, tel: +46 8 763 69 21

 
Press contact

Claes Eliasson, Press & PR

+46 76 396 53 19

claes.eliasson@seb.se

 
SEB is a leading Nordic financial services group. As a relationship bank, SEB in Sweden and the Baltic countries offers financial advice and a wide range of other financial services. In Denmark, Finland, Norway and Germany the bank's operations have a strong focus on corporate and investment banking based on a full-service offering to corporate and institutional clients. The international nature of SEB's business is reflected in its presence in some 20 countries worldwide. On June 30, 2011, the Group's total assets amounted to SEK 2,201 billion while its assets under management totalled SEK 1,356 billion. The Group has about 17,500 employees. Read more about SEB at www.sebgroup.com