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Fed Alarm Has $8.5 Billion Swedish Money Manager Dumping Risk 

May 19, 2016

Love Liman, Bloomberg

SEB Investment Management is avoiding U.S. stock markets and dramatically cutting its risk allocation as the prospect of tighter monetary policy from the Federal Reserve transforms the global landscape for investors.

The manager of 70 billion kronor ($8.5 billion) in multi-asset funds, which form part of the 800 billion kronor in assets under management at the bank created by Sweden’s Wallenberg family, is instead shifting focus to Asia and Europe. That way it can avoid developments in U.S. stock markets, where it finds valuations high, says Hans Peterson, global head of asset allocation and chief investment strategist. The prospect of wage growth is also set to erode profit, according to SEB, which expects the Fed to raise rates in the fall.

“Markets that have been pushed to high valuations because of the low interest rate environment include the U.S. stock market and the government bond markets, which are expensive,” Peterson said in an interview in Stockholm. “We are trying to find returns by moving our investments east, to Asia and also to some extent Europe.”

Though traders have scaled back their bets on how quickly the Fed will raise rates, the prospect of tighter U.S. monetary policy at some point this year is forcing investors to adjust their portfolios or risk being caught on the wrong side of markets when the tide turns. Read more

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