Every quarter, the world’s largest institutional investors look at their portfolios, notice the ratios are off, and start moving enormous piles of money around to get back on target. This time, JPMorgan estimates that process will involve roughly $165 billion in equity selling and corresponding bond buying as June comes to a close.
Who’s selling and how much
The selling pressure isn’t coming from one source. It’s a coordinated, if unintentional, pile-on from some of the planet’s biggest pools of capital.
US defined benefit pension funds, which collectively manage around $9.6 trillion in assets, are expected to offload approximately $55 billion in equities. These funds operate under strict allocation targets. When stocks outperform bonds over a quarter, the equity slice of the pie gets too big, and portfolio managers trim it back.
Japan’s Government Pension Investment Fund, better known as GPIF, is projected to sell around $60 billion in global equities. GPIF holds approximately $1.9 trillion in assets, making it the largest pension fund on Earth.
