The most important stock market players of the last century are arguably the defined benefit plans, aka the pension funds.

In the 1956, the decision by a British tobacco pension fund to invest in stocks arguably led to the rise of the so-called "equity cult."

Fast-forward to the most recent decade, pension funds got slammed as their asset values sank during the financial crisis.

However, many of those funds have been recovering those losses thanks to the historic equity bull market. Many are inching ever closer to fully-funded status.

And Morgan Stanley thinks this could prove to be a catalyst for stock market outflows.

"According to Morgan Stanley’s Pension and Endowment coverage group, the current average funding status for the largest 100 US corporate pension plans is above 90%," wrote Morgan Stanley's credit strategy team today. "As these plans approach fully funded status, the de-risking flow should driven an asset allocation shift from equities to long duration bonds."

This would be good for bonds and bad for stocks.

This pushes back against the more popular "great rotation" story, which argues that investors are dumping bonds and pouring their money into stocks.

pension funds cotdMorgan Stanley