Smart Money Trend: Stocks May be Winners of Bond Turbulence
12/16/2010 0 comments
Monitoring where asset allocation funds are putting their money gives an indication of whether fund managers are being more conservative or aggressive this week. MyPlanIQ's smart money indicator is derived based on comprehensive analysis of top asset allocation Gurus' recent asset exposure. Currently, it tracks the aggregate asset exposure on US equities and bonds.
We track two separate indicators:
This is calculated weekly and covers the last one year. For the week ended on 12/10/2010, equity exposure for the two sets of funds tracked were 60% and 66%, respectively.
Trends for the Top 3 Moderate Allocation Funds (Smart Money)
Aggregation of all Moderate Allocation Funds
As interest rates have moved higher, devaluing fixed-income securities, there is a sign of an asset allocation shift – falling bond values have caused investors to build up an overweight in equities. Benchmark 10-year note’s yield has jumped in part on growing optimism about the economy and on signs that growth could accelerate in 2011.
Although we have seen a rotation out of equities into fixed income consistently over the four weeks, it still remains unclear whether this trend will continue – after all, there will be a level where the higher yields start to threaten the positive momentum in the stock market.
Looking ahead to 2011, with recent clarity on future taxes and more signs that the economy is on a solid footing with improving economic data and stronger corporate earnings, equities can be propelled even further, driving more inflow into the equity market.
labels:investment,
Symbols:AGG,BBND,CIU,EEM,EFA,GSG,HYG,ICFI,IEF,IWM,IYR,JNK,MBB,MDY,MUB,PHB,QQQQ,SHV,SHY,SPY,TLT,VEU,VNQ,VWO,
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