Many Swedish asset managers claim the volatile stock market has not led to a different way of managing their portfolios, even if they have in many cases, as expected, brought their equity share to the lower benchmark rate of their mandates. Some in fact believe a volatile market should not be a reason for changing strategies at all.

Anders Jonnson, head of Swedish strategy with Carlson Investment Management, with some Skr25bn under management, says the only good reason for altering strategies would be if managers foresaw a weakening long-term trend in equity returns.

The volatility itself will not and should not alter our strategies, it is never possible to buy and sell at the exact moments in a market like we have at present. Furthermore the cost of transactions is way too high," he adds.

Jonnson says they do shift strategies though when they see a long-term sea change in the market. This would never have the focus of a day or a month though, but must be at least for a quarter or six month period.

Lars Lundquist, managing the Skr140bn portfolio of SEB Trygg-Hansa Liv, says their equity share has been geared down from 45% in late spring to a share of roughly 35% by the end of October.

For a life office like Trygg-Hansa, the normal benchmarking is to vary the equity share of the portfolio between 35-40%.

"We started selling in June with the assumption that the market for equities would underperform, and we are also expecting a recession, in which case we will strive to keep our equity level at around 35% of the total portfolio. However, when the market dropped low in mid-October, we started buying again," Lundquist says.

These acquisitions by no means indicate a different strategy, more a change in tactics, he adds.

Other portfolio managers in the Swedish market have very much the same idea, which seems to involve a lowering of equity share for the expected recession, but above all not for short term reasons.

The only reason for managers to increase equity shares and start buying again appears to be when prices get so low they are unable to keep their fingers off the buy button. Mikael Nyman"

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