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Investment Outlook: Finding ways out of a barren landscape

The economic situation has deteriorated further since the summer. We are heading into a clear slowdown, perhaps best described as a mild recession. We expect genuine weakness in 2023 as a whole, but we believe that 2024 will show a clear improvement in economic growth. Falling growth and rising inflation have had a severe impact on stock and fixed income markets. But depressed risk appetite, more palatable valuation levels and a light on the economic horizon will help us to achieve a balanced picture of the appropriate risk level in our portfolios, despite potential hazards.

“We believe that investors will view 2023 as a turnaround year and instead look towards 2024. Thus, in the rather near future, investors will factor in a turnaround and improvement in the situation and adjust their risk level and positioning accordingly. In practice, this would mean there is a good chance that risk appetite will bottom out during the second half of 2022. Taking this into account and considering a reasonable valuation and defensive positioning, we end up with a neutral risk appetite in our portfolios – despite all of the current sources of concern,” says Fredrik Öberg, Chief Investment Officer at SEB’s Private Wealth Management & Family Office division.


At the asset class level, we have a fairly neutral allocation, with a slight overweight for equities. This results in a corresponding marginal underweight for fixed income and alternative investments. The overall structure, including the profiles of sub-portfolios, represents a broad portfolio that – in today’s highly volatile environment – is showing resilience as risk appetite falls, despite the above-mentioned slight overweight for equities.  

Having a broad risk exposure is always important in times of uncertainty. This provides stability and future room for manoeuvre and should be applied whether one is a supporter of a deeper downturn scenario or of a milder variant. It is a principle we will continue to apply to our portfolios under the prevailing market circumstances, since it produces returns that are more robust.

Examples of positions that have led to stabilising effects during the year in our portfolios are investments in Swedish equities with low valuations, the overweight in global equities and its positive currency effect, holdings in alternative investments with low correlation to equities and corporate bonds that have not fallen in value, as well as a short duration in our fixed income portfolios, which has reduced the impact of the upturn in interest rates. Examples of opposite effects are our exposure to growth companies in global equities and our allocation between asset classes, as well as our sustainability-based exclusions, which in 2022 hurt our relative returns when oil and gas prices rose sharply. This is a long-term stance that we believe is sound and that we expect will boost our returns in the future.

Theme articles

This issue of Investment Outlook also includes three theme articles. The first is a review of our take on biotechnology, a cyclically insensitive sector with a growth profile. Our second theme article looks at how investors can identify which companies are actively engaged in the transition to a more sustainable world. Our third theme article looks at current conditions in China. The country is lagging behind its official targets. How do things look as we approach 2023?

Investment Outlook can be read in its entirety or as a two-page summary at www.seb.se/investmentoutlookreport.