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Alternative Market Briefing

Expecting the Great Rotation, Part 1

Wednesday, November 13, 2013

Benedicte Gravrand, Opalesque Geneva:

This series of articles explores the concept of the Great Rotation, its reality and how it is viewed. Today, we look at how the Great Rotation was predicted last year just as equities were outperforming Treasuries.

Part 2 will be published tomorrow (Nov.14th, 2013), Part 3 on Friday and Part 4 on Monday.

The Vanguard Total Stock Market Index Fund recently toppled the Pimco Total Return bond fund as the world’s biggest mutual fund by assets under management, after Pimco had held that title for half a decade, Bloomberg reported. Indeed, the Pimco fund shrunk by $37.5bn this year to $247.9bn at the end of October, while the Vanguard fund ended October with $251bn.

This is one of the signs that investors expect the 30-year bull market in bonds to end and want to profit from the bull market in U.S. equities. Another was seen in the latest BofA Merrill Lynch Fund Manager Survey which said investors had increased their equity allocations during October to a net 52% overweight, while also upping their underweight in bonds. However, cash holdings rose to 4.6% and there is a small net majority of asset allocators who now view equit......................

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