Given the recovery position in the economic clock, “we’re past the stage in which bonds rally,” says Schellbach. “At the same time, the amount of excess capacity still to be worked out of the major economies will continue to support sovereign markets even in the face of massive supply increases, and the risks around policy rates point to Euro out-performance versus the US.” REIT allocations have been reduced to a neutral portfolio holding, and listed real estate has been an outperforming asset class over the past three months driven by attractive valuations, high yields and leverage to an economic recovery. Schellbach says Citi is “unable to get overly excited on the sector given valuations are no longer compelling yet structural issues remain”. He says Citi views real estate as one asset class, irrespective of it being domestic or offshore, retail-office-industrial or residential.