A trader works on the floor of the New York Stock Exchange on November 18, 2013. Getty Images

A 'Great Rotation' out of bonds into stocks is only just underway and is setting up to be one of the major investment themes of 2014, strategists say. Equities, boosted by monetary stimulus from central banks and a recovery in the global economy, are the best performing asset class so far in 2013. U.S. stocks have hit record highs this month, fueling talk of a stock-market bubble, while Japan's blue-chip Nikkei stock index is up a hefty 45 percent this year.

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Government bonds meanwhile have fallen out of favor and yields have crept up in recent months as investors brace for an unwinding of the Federal Reserve's bond-buying program.

"The Great Rotation has started and if you look at the U.S., we've had record redemptions in bond funds this year and of course when the Fed tapering fears started even more people piled into equities," said Beat Wittmann, CEO of TCMG Asset Management, which has roughly $10 billion worth of assets under management.

"I can tell you that in Europe this has not started yet, so the single most important theme in 2014 will be the Great Rotation, continuing in the U.S. and starting in Europe," he said.

Bond funds globally have seen withdrawals this year amid expectations for Fed tapering. In August, U.S. bond mutual funds suffered their biggest redemptions since June. According to the U.S. -based Investment Company Institute, bond funds saw withdrawals of $11.1 billion in the week ended Aug. 21, the largest move since the week ended June 26, when $28.2 billion was withdrawn.

In contrast, equity funds have seen massive inflows.

There has been some $231 billion worth of inflows into stock funds this year, the most since records began in 2002 and well above the previous record inflow of $69 billion in 2010, Bank of America Merrill Lynch (BofAML) said earlier this month.

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"Getting into year-end this [the Great Rotation] is always a good trade to play," said Vishnu Varathan, market economist, Mizuho Corp Bank. "Yellen is seen as a dove and that sets the stock markets up for a good rally," he said, referring to Janet Yellen, the current Federal Reserve vice chair who has been nominated as next Chairman.

Recent dovish comments from Yellen have been seen as an indication that the Fed's monetary stimulus is likely to remain in place for some time.