What will it take to unleash the cash locked up in credit?

David Man, a partner at RMG Wealth, said that after a 30-year bull market in credit it is easy to understand why a genuine shift has still to occur.

‘Investors want two things, certainty and income. Corporate bonds still provide for those needs,’ he said. ‘As yields continue to drop some investors – those with a greater or longer-term risk appetite – are able to look beyond equity risk and begin to focus on the dividends of high quality companies. They are able to move along the risk curve.’

But Man cautioned: ‘For a major shift to occur, we believe we need to see the certainty of equity return come back alongside a trust in equities that is simply not present, even now. What would signal that trust would be either a market rerating, which could take a few years, or the market to fall.’

Jan Loeys, head of global asset allocation at JP Morgan, said the political landscape is blocking the switch between credit and equities that many feel will eventually be inevitable.

He pointed to the looming presidential elections in the US and the fiscal cliff risk, as well as a ‘whole host of forces’ holding back growth.

‘Value dictates that long-term investors start switching from credit to equities, but low growth, fiscal uncertainties, attractive credit spreads and little sign of worsening credit fundamentals keep us overweight both equity and credit,’ he added.