Being bearish on bonds and bullish on equities has been the consensus call for more than a year, but Societe Generale tips the tide is turning and it's raising its allocation to fixed income.
"While growth in 2014 was disappointing, it should be much better in 2015," Societe Generale said in a note this week. "Gross domestic product (GDP) growth above 3 percent does not bode well for super-expensive U.S. equities, as the U.S. central bank should be forced to exit its zero-rate policy by summer 2015."
The bank has shifted toward a balanced portfolio, cutting the equity allocation by 10 percentage points to 50 percent and raising its allocation to bonds and alternatives by 10 percentage points to 50 percent. The increased fixed income allocation included adding U.S. Treasurys for their U.S. dollar exposure and carry, U.S. and European corporate bonds and cash in the U.S. dollar.