The cult of the bond

The 'cult of equity' that bolstered markets in the late 20th century is gradually being replaced with 'the cult of the bond'. So why the shift into bonds?

It's not just double-dips and deflation that equity investors have to worry about, according to Citigroup's global equity strategist Robert Buckland. Western stockmarkets face a longer-term headwind: the end of the "cult of equity" that bolstered markets in the late 20th century and its gradual replacement with "the cult of the bond".

There has been a "profound reassessment of the merits of the two asset classes" by institutional and retail investors, says Buckland. In Britain, pension funds piled into equities from the early 1960s onwards. By the early 1990s they held 76% of assets in stocks versus just 12% in bonds. Now, following a sharp slide in equity weightings over the past ten years, the proportions are roughly equal at 40%, as they were in the early 1960s. It's a similar story in America.

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