Portfolio

Experts increasingly believe the bond rally has run its course.

Although stocks didn’t rally until the fourth quarter of this year, that momentum could continue into 2011, according to The Wall Street Journal’s “Heard on the Street” column Wednesday. Thus, the two-year-long aversion to stocks and stock funds could finally be coming to an end.

Morgan Stanley Smith Barney characterized its outlook for 2011 with the phrase “recovery becomes expansion.” The business-cycle recovery in the global economy that began in the summer of 2009 is now an expansion, it says in a new report.

Hedge fund managers found it a little easier to hang out their own shingles in the third quarter.

Get ready for a strong recovery in 2011, as corporate profits will boost the markets, predicts kasina CEO Steven Miyao. By mid-year, positive flows into equities will exceed flows into bonds, he said.

The new retirement plan requirement to disclose all fees will be particularly difficult for non-registered investments, such as bank collective funds, separately managed accounts and annuities, the SPARK Institute warns. Thus, it is developing standards to facilitate disclosure.

Americans’ financial outlook is improving, according to the December Country Financial Security Index. Thirty-eight percent rate their financial security positively, and another 15% sense their financial security is improving.

Some transaction participants appear to be rushing to market questionable Build America Bond, bank-qualified or other municipal bond deals before tax incentives expire at the end of the year and risking Internal Revenue Service enforcement action for violations of tax requirements, according to market sources.

Investors continued to ferry cash out of their municipal bond mutual funds at historic rates last week as a tumultuous sell-off sowed fear among buyers.

Morningstar said investors pulled $7.6 billion from muni bond funds, the category’s worst month for outflows except for the $8 billion redeemed in October 2008 during the credit crisis peak.