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Investment Outlook: Investors look past soft landing

Our main thesis for 2024 is that positive drivers, a gradual decline in interest rates and a bottoming out of the economy will lay the groundwork for a broader stock market upturn, driven by former stragglers. But the economic soft-landing scenario is already largely discounted in the market, which limits its potential. Nevertheless, we recommend staying on the positive side with regard to risk assets, i.e. between neutral and overweight.

“Our strategy since September 2022 has been to avoid being too defensively positioned and to ensure that our portfolios have good risk diversification. We have also tried to benefit from positive structural forces. This allowed us to capture the healthy returns generated by both fixed income and equity investments. The journey was bumpy and the pitfalls many, but the end result was strong,” says Fredrik Öberg, Chief Investment Officer at SEB’s Private Wealth Management & Family Office Division.

Our portfolio composition delivered for us in 2023, and we will maintain it in early 2024
The structure of our portfolios is such that they perform well amid rising risk appetite, and they decline when risk aversion increases. This means we are overweight in risk, although the equity portion of our overall portfolio is only marginally overweight. In our global sub-portfolio, we maintain an overweight in last year’s winners, large US growth companies. This is complemented by an overweight in small and medium-sized enterprises, with a focus on lower valued companies. There are clear underweights in Europe and some defensive sectors. If our main scenario holds, it is likely that we will gradually adjust this portfolio composition during the year.

In Swedish equities, our focus is on equity-specific risk-taking among major listed companies, supplemented by what we regard as a suitable proportion of small and medium-sized companies that we invest in via small cap funds. The latter experienced a weak period throughout 2022 and in 2023, apart from the rally during the last quarter. This weak period resulted in a much-needed downward adjustment of the valuation parameter, and the future outlook is improving. In fixed income investments, we do not expect a continued narrowing in credit spreads or sharp declines in long-term yields. On the other hand, we do not expect any drama in the other direction either. We are thus starting 2024 with neutral exposure to high yield corporate bonds and an overweight in investment grade bonds, and with an average duration of just over three years.

Theme articles
This February 2024 edition of Investment Outlook also includes two interesting theme articles:

  • Theme: China – A focus on “modern industrial systems”
  • Theme: Greater circular material flows will create opportunities

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

For further information, contact:
Fredrik Öberg, CIO, Private Wealth Management & Family Office, SEB
+46 70 767 6179

Press contact:
Niklas Magnusson, Head of Media Relations & External Communication
+46 70 763 8243

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 31 December 2023, the Group's total assets amounted to SEK 3,608bn while assets under management totalled SEK 2,361bn. Read more about SEB at sebgroup.com.