Pension funds and large institutions have historically been horrific market timers. Now, market timing isn’t their job, still, they tend to be overweight or underweight at the worst times.
They had record exposure to equities in 2000 and they’ve missed a big chunk of this record multi-year rally. In fact, this is the first time ever the SPX has been up three straight years and pension funds have actually lowered their allocations to equities.
Now here’s a great graphic that shows US Institutional Asset Allocations from Pensions & Investments. Allocations to stocks is at its lowest level since 1992 and bonds have a huge proportion of the overall allocation.
Lastly, check out Other, which checks in at 5.2%, its highest since 1992. I’m taking a guess a big part of that is gold. The same asset that has dropped nearly 20% this year. Further proof this isn’t a group you want to mimic.
Longer-term this bull market is alive and well. Sure, we’ll have pullbacks and periods of choppiness, but to see how the big boys are still missing out on this rally is very bullish from a contrarian point of view.
Source Pension & Investments