Investors increasingly are running from risk even while maintaining a strong presence in the stock market.
While the two goals may seem incongruous, market participants are making it happen, increasing allocations to large-cap equities while dramatically slashing assets devoted to smaller companies and the once hugely popular high-yield bonds.
The moves come as calls for a market correction—a drop of 10 percent or more—intensify among Wall Street strategists worried about an aging bull market, geopolitical tensions and substantial changes coming to what has been ultra-easy Federal Reserve monetary policy.
"People are getting defensive for a host of reasons, everything from people who think geopolitical events could spike oil and put us down, to those who think the economy's going to roll over to those who think the Fed is behind the curve" on inflation, said Jim Paulsen, chief market strategist at Wells Capital Management. "At the end of the day all of those things put you in the same place—a more defensive posture but an unwillingness to come out of the market."