Goldman Sees 'Gradual Rotation' Into Stocks

CNBC

Calls earlier in the year for a "great rotation" into stocks from fixed income may have been a little premature, but Goldman Sachs' replacement for Jim O'Neill says there will be a "gradual rotation" and money will move back into stocks eventually.

"People are moving money," Sheila Patel, the head of international at Goldman Sachs Asset Management told CNBC Tuesday. "I do think you see money come back to equities."

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It has taken nearly thirty years for the current asset allocation to favor bonds over stocks, she said, adding that it won't be overdone overnight and a gradual move back into equities is more likely.

"Perhaps the best name is not the 'great rotation' but the 'gradual rotation'. If you look at the state of investment today and asset allocation it has taken years, not just since the financial crisis to get to the current asset allocation," she said.

"To expect that to wholesale change is very unlikely, and in fact if you look at the demographics and some of the reasons for those positions, they still makes good sense. So I think you see people using their cash allocations...and saying it's time to look at equities."

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Currently based in Singapore, Patel has been touted by Goldman Sachs as the successor to Jim O'Neill - who found international fame when he coined the term BRIC to describe the emerging economies of Brazil, Russia, India, and China.

Anecdotally Patel suggested that investment funds in twelve countries she has recently visited have been slowly changing to overweight on equities, with fund flows looking particularly strong in the last two weeks.


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