Where are the IPO's? The further de-equitization of markets

Forget Facebook, there has been a shortage of IPO's in 2012. There have been only 224 announced this year versus 308 last year for a decline of 27%. There have been 57 withdrawn or postponed versus 43 last year. The amount issued is up 4% to $31 billion but if the largest Facebook deal is dropped, the numbers are very unattractive.

Talk is growing that there is a "de-equitization" happening in both the US and Europe. There has been a decline in equity allocations across pension funds in the US. Bond mutual fund flows have continued to increase relative to equity flows. For example, in the last month, bond fund saw an increase of close to $18 billion while equity funds lost $11 billion. Investors want safety regardless of yield. This flow will create the next investment problem as investors over-extend into bonds.