THE world’s biggest money managers are set to unload up to $100 billion of stocks in the final few weeks of the year, adding to a selloff that’s snowballed since Jerome Powell’s unequivocal message that policymakers will press on with aggressive tightening at the risk of job cuts and a recession.
When December wraps up, sovereign wealth funds could be done selling roughly $29 billion in equities while US defined benefit pension plans would need to shift up to $70 billion from equities to bonds to meet their long-term targets and bring them back to September levels, JPMorgan estimates.THE pension and sovereign wealth funds that form the backbone of the investing community typically rebalance their market exposures every quarter to achieve a mix of 60 percent stocks and 40 percent bonds.
The adjustments away from equities will compound some $30 billion of forced sales expected by trend-chasing quants following a slide that’s taken the S&P 500 down about 6 percent from its November high. According to JPMorgan calculations, Japan’s $1.6 trillion GPIF, the world’s largest pension fund, would have to sell $17 billion of equities to get back to its target asset allocation. The $1.3 trillion Norwegian Oil Fund could move $12 billion from stocks to bonds.
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