J.P.Morgan Flag Rebalancing Risks For Equities Into Year-End

Friday saw J.P.Morgan note that they "see some vulnerability in equity markets in the near term from balanced mutual funds, a $7tn universe, having to sell around $160bn of equities globally to revert to their target 60:40 allocation either by the end of November or by the end of December at the latest. A continuation of the equity market rally into December is likely to give rise to additional $150bn of equity selling into the end of December by pension fund entities that tend to rebalance on a quarterly basis. The past two week's value rotation does not yet appear to have prompted an acceleration of inflows into value ETFs, though it also implies there is scope for that capital to be redeployed to support the value rotation."