Calls earlier in the year for a "great rotation" into stocks from fixed income may have been a little premature, but Goldman Sachs Asset Management's head of international says there will be a "gradual rotation" and money will move back into stocks eventually.
"People are moving money," Sheila Patel told CNBC Tuesday. "I do think you see money come back to equities."
(Read More: QE Halt 'Too Violent' for Market: Fed's Fisher)
It has taken nearly thirty years for the current asset allocation to favor bonds over stocks, she said, adding that it won't be overdone overnight and a gradual move back into equities is more likely.
"Perhaps the best name is not the 'great rotation' but the 'gradual rotation'. If you look at the state of investment today and asset allocation it has taken years, not just since the financial crisis to get to the current asset allocation," she said.
(Read More: Goldman Warns of Big Move in Australian Dollar)
"To expect that to wholesale change is very unlikely, and in fact if you look at the demographics and some of the reasons for those positions, they still makes good sense. So I think you see people using their cash allocations...and saying it's time to look at equities."
The term "the great rotation" came to the fore in January as a "risk-on" rally in equities, which has since seen the Dow and rise by around 17 percent, gathered pace. But rather than pension and insurance funds changing their strategic preference back towards equities from extreme positioning in bonds, funds have remained relatively unchanged and bond prices have barely flickered from their record lows.
Meanwhile, some analysts have pointed towards stock buybacks by firms as a reason for the rally and highlight a scarcity of stocks.
(Read More: Stocks Getting Scarce as Fed-Driven Rally Sees No End)
Anecdotally Patel suggested that investment funds in twelve countries she has recently visited have been changing to overweight on equities and is now a hot topic, with fund flows looking particularly strong in the last two weeks.
"If you look at the last week or two fund flows have been very strong into equities but out of cash, and also going into bonds at a lower rate," she said. "In the U.S. there is always a positive sentiment towards equities underlying, and so there is some ability to move there too."
—By CNBC.com's Matt Clinch; Follow him on Twitter @mattclinch81
Correction: an earlier version of this story incorrectly stated that Patel was Jim O'Neill's replacement. O'Neill was in fact chairman of Goldman Sachs Asset Management, while Patel is the head of international.
