2009 bond fund flows have been massive , and bond allocations appear stretched. Meanwhile, investors' stock allocations are at multi-year lows.
Plus, stock valuations appear reasonable. Foreigners have actually been buying U.S. stocks even though Americans have been bearish overall.
Citi: Equity allocation seems light and may need some adjustment. In view of both mutual funds flows as well as equity and credit market rallies, it appears likely that investors remain underweight stocks and a reallocation seems probable especially in light of poor returns from alternatives, particularly private equity investments. To a great degree, a rebound in hedge fund performance has redeemed concerns that money might continue to leave these investment vehicles and assets under management have climbed back meaningfully with modest inflows.
Why investors could shift into stocks for 2010 >>>
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