Great Rotation portfolio risks becoming crowded

The world’s biggest state- backed funds are joining the Great Rotation portfolio switch out of bonds into equities, a move that risks crowding the trade and lessening the allure.

The shift into higher-return equities out of low-yielding bonds is one of the top investment themes of 2013, driven mainly by US private pension funds and retail investors.

But recent plans by Japan’s $80bn (€59.9bn) pension fund to increase equity weightings at the expense of bonds and Norway’s move to boost stocks and cut some bonds highlight a greater involvement from the world’s biggest and influential investors.