Friday, December 23, 2016

"Rebalancing Pensions Will Have To Sell Huge Stock Stakes By Year End"

From Barron's Focus on Funds:
Credit Suisse’s Victor Lin takes a look at how pensions may rebalance as the month comes to a close.

With the S&P 500 up more than 3% this month and 5% this quarter, Lin estimates that rotation out of domestic U.S. equities would be one of the largest on record.  He estimates that pension funds that have to do monthly and quarterly rebalancing would have to sell some $38 billion of U.S. stocks to get to prior asset allocations by year end.

Outside of the domestic stock market, US pension funds are net sellers, to the tune of $864 million in developed market and international equities, while the stark underperformance of emerging markets could lead to more than $6.3 billion in buying of these equities to rebalance....MORE