Where did the smart money go in December?

In the euphoria of the early 2013 rally, it is easy to forget the grim shadow cast by the US fiscal cliff at the end of 2012. However, equities were gathering momentum in December in spite of the continued uncertainty on US tax rises and spending cuts. Fixed income, in contrast, was beginning to look pricey, even for the most safety conscious investors, and many were starting to reconsider their views on the asset class, a trend that has accelerated at the start of 2013. Investors’ year-long preference for fixed interest was certainly over by the end of 2012. According to figures from...