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JPMorgan Estimates Up To $310 Billion In Forced Selling By Year-End

Earlier this week we reported that with month-end fast approaching, banks are starting to publish their estimates of what upcoming pension rebalancings will mean for stock and bond flows.

The first such forecast came from Goldman Sachs, whose month-end pension rebalancing published on Wednesday estimated that a net $36BN of equities to sell following a month of substantial outperformance of stocks vs bonds. Notably, according to Goldman, this is the fourth largest sell estimate on record going back to 2000, and ranks in the 96th percentile among all buy and sell estimates in absolute dollar-value.

Well, not to be outdone, JPMorgan which has accumulated a track record of estimating rebalancing flows (even if at times it means one JPM quant’s estimates facing off against another), writes that according to its own calculations, the $7 trillion universe of balanced mutual funds is on pace for a far greater month and quarter-end selling spree than the one estimates by Goldman… greater as much as 10x.

In response to client interest sparked by the Goldman report, JPM’s Nick Panigirtzoglou writes that as we approach month-end, “the equity rebalancing flow question is resurfacing in our client conversations” to wit: “How much of equity rebalancing flow should we expect into month-end, i.e. into the end of November? And how much more rebalancing into quarter-end, i.e. into the end of December?”

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