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Investors show 'clear shift' from bonds to shares
Rising popularity of equity funds fuels claims of a 'great rotation' out of bonds.
Sales of funds invested in shares out-stripped bond funds in each of the last four months of 2012, fuelling claims of a 'great rotation' into equities by yield-seeking investors.
While during 2012 as a whole fixed income funds were most in demand, attracting £5.6 billion in inflows, equity flows outstripped fixed income for each of the last four months of the year to total £3.4 billion.
Bonds have been popular for their perceived safety during the financial crisis. But some investors fear strong inflows are creating the conditions for a 'bubble'. This year investors are widely tipped to buy into dividend-paying shares as an alternative source of income.
The fund flows show a ‘clear shift’ in investor mindset, said Daniel Godfrey, chief executive of the IMA, the industry body that publishes the statistics.
The data comes amid questions over whether January's market rally in share markets can continue into the rest of 2013. Some market commentators are predicting a 'correction' in the near-future as the economic backdrop, while improved, remains weak.
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