Markets & Finance

S&P Increases Recommended Equity Exposure

Standard & Poor's

Investment Policy Committee has voted to increase the equity portion of its

recommended asset allocation to 65% from 60%, by reducing the cash allocation to 10%, from 15%. The 25% exposure to bonds remains intact.

What are the reasons behind this decision? The expectation of sharply lower rates, an improvement in the way the market reacts to negative news, and the likelihood that further advances could attract cash back into the market. And it looks like there's plenty sitting on the sidelines: mutual fund cash reserves now exceed 6.5%.

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