ENSKILDA BANKEN 
We foresee a recession during 2023, followed by a more positive economic outlook in 2024 and beyond. Combined with reasonable asset valuations and a cautious attitude among investors, we believe it is still reasonable to maintain a largely neutral risk level. Still, our portfolios include some reallocations since our last Investment Outlook in September.
"The balance between positive and negative factors has shifted. This influences our decisions regarding the appropriate distribution of risk. On the positive side, we see more appealing valuations of both equities and fixed-income investments, although it remains important to be selective. In addition, problematic inflationary impulses and their negative effects look set to culminate soon. On the negative side, we are primarily seeing weak economic signals that cannot elicit traditional support from central banks, since they are fully occupied with countering high inflation. We thus consider it appropriate to maintain a neutral level of risk," says Fredrik Öberg, Chief Investment Officer at SEB's
Allocation
In our global equity portfolio, we are continuing to prioritise high-quality growth companies, since headwinds from rising interest rates should fade. We have added a partial currency hedge against the US dollar, which is actually much like increasing the proportion of Swedish equities at the expense of global ones.
Within Swedish equities, we are maintaining an overweight in large-cap companies with lower valuations, which are mainly found among industrials and financials. We are complementing this with small and medium-sized companies that have more of a growth profile.
Within fixed-income investments, we have recently extended our average duration and have approached our benchmark index, even though we expect the interest rate hiking phase to slow down.
As per usual, our alternative investments are independent, with little connection to the performance of both equities and bonds. This is the part of our portfolio that has shown the most stability during 2022.
How we adjust our risk in the near future will probably depend on how quickly inflation and the economy slow down, and whether or not any structural weaknesses are exposed in the financial system. However, we believe it is too late to become distinctively defensive in our portfolios, as we expect the interest rate hiking phase to now slow down. Even though we foresee continued tough times in 2023, expected returns have at the same time risen, especially viewed in a slightly longer-term perspective.
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Investment Outlook can be read in its entirety or as a two-page summary at www.seb.se/investmentoutlookreport, where a web video I also available.
For further information, contact:
Fredrik Öberg, CIO,
+46 70 767 6179
fredrik.oberg@seb.se
+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
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