Analysts at Oppenheimer are advising investors to reduce their holdings in Goldman Sachs (GS) and Morgan Stanley (MS) and reallocate the capital into stocks within the alternative asset management sector.

The investment bank has downgraded its rating on both Goldman Sachs and Morgan Stanley from "Perform" to "Underperform."

Analyst Chris Kotowski stated in a client note released on Tuesday, "We acknowledge that there are no immediate, specific fundamental concerns at either company. However, we maintain the view that both commercial banking and investment banking are mature, highly cyclical industries. While the current favorable cycle may persist for another 12 to 18 months or longer, we prefer not to wait for warning signs to materialize. For these two investment banks, we favor taking profits and securing gains."

In its latest research report, Oppenheimer recommends investors position themselves in several alternative asset management stocks, including Ares Management, Blackstone Group, and KKR & Co.

Kotowski wrote, "With risk aversion currently dominating the market, these asset managers' balance sheets carry significantly lower leverage compared to traditional financial intermediaries."