Mutual fund and other institutional investors are moving heavily into financial stocks, believing they probably hit their lowest point in the first quarter and are poised for sharp gains, according to strategists at Oppenheimer & Co.

“Recall that the primary theme among portfolio managers surrounding the sector in 2008 was the elevated risk associated with owning any financial stocks,” the strategists said in a report. “Themes have shifted so far in 2009, with portfolio risk now residing with being too underweight financials. [Strategies] have dramatically changed.”

Acknowledging that credit spreads have contracted, that spreads on bonds of financial services companies have also narrowed and that bank stock sales are rising, the Oppenheimer strategists nonetheless assigned a “market weight” recommendation to the financial services sector.

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