Investment Outlook: Growth worries offset by rate cut hopes

12 September 2023 07:30

An expected economic soft landing, followed by a relatively moderate recovery, will increase the odds that central banks will initiate key rate cuts in 2024. Share valuations and risk appetite levels rose in 2023, making a consolidation or slight downturn reasonable. The result is thus still a mixed bag, with a continued risk of disruptions and surprises. This is why we support a balanced approach, with neutral risk exposure and good risk diversification.

“During the year, financial assets have shown strength. Risk appetite among investors has gradually increased. Bearing risk has generally been profitable. However, the optimal portfolio has been difficult to find, since the market has been disparate and its pitfalls numerous. To cope with new surprises, portfolios with broad exposure and neutral risk level are still what we advocate," says Fredrik Öberg, Chief Investment Officer at SEB's Private Wealth Management & Family Office Division.

Allocation
It is important to have a portfolio that can withstand events such as new banking sector turmoil, a falling Swedish krona and a sputtering Chinese capital market. These are among the events that have created concern so far this year. It is hard to predict exactly what the future trouble spots may be. We do not know what negative effects may occur after a time lag, triggered by drastically higher interest rates. As a result, our portfolios have a normal weight in equities, with more global than Swedish equities, and we are careful not to unilaterally choose a given type of shares. We also have a normal proportion of corporate bonds − a major contrast to the zero interest rate period, when we had double this weight in the high yield segment. Finally, we have a lower proportion of our assets in alternative investment sub-portfolios, while holding more fixed income investments that offer good current yields and the potential for extra returns if government bond yields start to fall.

Theme articles
This edition of Investment Outlook also includes two theme articles:
• Semiconductors – the backbone of digitisation
• Paradigm shift – from ownership to usership

You will find the full report, and a web video, at www.seb.se/investmentoutlookreport

For further information, contact:
Fredrik Öberg, CIO, Private Wealth Management & Family Office, SEB
+46 70 767 6179
fredrik.oberg@seb.se

Press contact:
Niklas Magnusson, Head of Media Relations & External Communication
+46 70 763 8243
niklas.x.magnusson@seb.se

SEB is a leading northern European financial services group with international reach. We exist to positively shape the future with responsible advice and capital, today and for generations to come. By partnering with our customers, we want to be a leading catalyst in the transition to a more sustainable world. In Sweden and the Baltic countries, SEB offers financial advice and a wide range of financial services. In Denmark, Finland, Norway, Germany and the United Kingdom, we 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 our presence in more than 20 countries worldwide, with around 17,500 employees. At 30 June 2023, the Group's total assets amounted to SEK 4,172bn while assets under management totalled SEK 2,271bn. Read more about SEB at sebgroup.com.