Fund flows: A case of great rotation or great confusion?

Kleinwort Benson CIO discusses where investors are really putting their money and reveals the equity markets he is backing this year.

What is your view on the great rotation out of bonds into equities this year? I call this the ‘great confusion’ instead. Flows into bonds have not slowed down so far this year; in fact they have been faster than last year. Apart from that, if someone is selling bonds, someone else must be buying them. The supply of bonds has increased massively since 2007, so there is no wonder more money is flowing into the asset class. But the icing on the cake is the growth in equity markets does not depend on flows into equities. If there has been a rotation out of equities over the past four y...