WEALTH MANAGER-U.S. bonds may no longer be a safe haven
Tue Nov 9, 2010 1:42pm EST
* Investors sticking to bonds despite inflation risk
* Advisers trying to edge clients back into equities
* Investors should avoid Treasuries, munis-executive
By Helen Kearney
NEW YORK, Nov 9 (Reuters) – The flood of money into the fixed-income market this year is raising concern another bubble could be brewing, but nervous investors remain reluctant to return to equities.
Individual investors typically chase returns and analysts agree equity markets may offer greater potential than bonds, which have soared in price since the 2008 financial crisis. Yet fear has the upper hand on greed so far and that has Brown Brothers Harriman Chief Investment Strategist G. Scott Clemons worried.
“They’re not chasing returns as much as fleeing risk, or what they perceive to be risk,” Clemons told Reuters. “But they’re going right into the risks posed by bonds.”
About $59 billion left U.S. equity mutual funds this year through the end of September, while $243 billion piled into bond funds, according to the Investment Company Institute.