Asset allocation to bonds - jumping off a cliff

Global asset allocations are becoming more biased to fixed income. Global asset allocation has moved above 50% when you look at bonds and cash in some surveys. $4 trillion has moved into fixed income funds versus $400 billion in equities over the past four years. The global pension market has moved from a 61/30% allocation to stocks and bonds to now 41/37%. 

Of course, over this time we have seen a significant increase in equity returns. The real returns on cash are negative. the real returns on bonds are negative. So the current asset allocation is a slow bleed of loses. If you consider that rates move back to longer-term averages of 5% in the US, the bleed is even bigger. The unsophisticated investor in futures and equities is a bad timer. The same may also include fixed income investors. We could be in a bad timing phase for all investors with respect to fixed income. There is limited reason for a fixed income gain except a complete failure in government policies.