Analysis: US Pension Funds Expected to Sell $20 Billion in US Stocks by the End of the Month

On May 30, a report from Goldman Sachs' trading department indicated that U.S. pension funds are expected to sell $20 billion in stocks by the end of the month as part of their month-end rebalancing operations. According to Goldman Sachs data, this total value of $20 billion ranks in the 86th percentile of similar net buying or selling rebalancing since 2000.

The reason for this occurrence is that many pension plans adjust the stock-bond allocation ratio (which can be seen as a large-scale version of the traditional 60/40 portfolio). Despite the strong performance of stocks this month, bonds have performed poorly, meaning that significant adjustments are needed in model portfolios to rebalance these two asset classes.

Bret Kenwell, a U.S. investment analyst at eToro, stated: "We are not accustomed to seeing such large fluctuations in the bond market, especially for pension funds or institutional investors, whose scale is almost in the billions of dollars. When these rebalancing operations unfold rapidly, they can indeed become a 'compass' for the short to medium-term market. Whether it's a 90-day trade negotiation pause, a postponed deadline for negotiations with the EU, or legal procedures preventing Trump from implementing tariff policies, I expect that Wall Street generally believes the worst of the tariff issues is over, and the situation is moving towards a more conciliatory direction." (Jin10)