(Bloomberg) -- Pension funds are poised to shift as much as $1 trillion from stocks to bonds in coming years to lock in gains and limit the potential for big losses, according to Wells Fargo & Co.
“Definitely there’s a lot of money that will want to move,” said Andy Hunt, head of global credit and liability-driven investing at Wells Fargo Asset Management, predicting it will happen within roughly five years. “Best case, it’ll be between a half a trillion and a trillion.”
Struggling to make up a shortfall in funding, many pensions held on to large equity portfolios, trying to juice returns as ultra-low interest rates squeezed yields on bonds.
But even a rally in the $27 trillion U.S. stock market wasn’t enough to fix the problem. Now, with corporations taking steps to narrow the gaps, managers are shifting to less volatile assets.
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