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The possible increased allocation into bonds comes as global
bond yields have been rising on strengthening business
activities across the world and expectations of reduced stimulus
from major central banks.
On Monday, the benchmark 10-year Treasury yield touched 2.727
percent, the highest since April 2014, Reuters data showed.
Higher yields would help provide pensions with a stable source
of income to meet payouts to retirees.
"Rising long-term yields can bring a considerable relief to
private pensions," the Wells Fargo strategists wrote based their
estimates on month-end allocation changes.
Corporate pensions have struggled from historic low yields which
have made their existing pension obligations expensive. Their
average pension funding gap, future obligations versus current
investments, has remained wide despite the run-up in stock
prices.
Retirement plans may need to add $16 billion in fixed income and
to reduce up to $20 billion in equities for their month-end
asset-allocation rebalancing, they wrote in a research note.
Corporate pensions could pocket some gains from Wall Street's
blistering start to 2018 with the S&P 500 gaining 7 percent in
January. They could put the money in less risky Treasuries.
"The $15-20 billion asset allocation shift is quite sizable in
the context of recent experience," the Wells Fargo strategists
wrote. "The size of the January shift is a testament to the
large gap in performance between equities and Treasuries at the
start of 2018."
(Reporting by Richard Leong; Editing by David Gregorio)
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