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AAII Asset Allocation Survey: Cash Allocations Rebound in August

Cash allocations among individual investors rebounded last month after having set a 17-year low in July. The August AAII Asset Allocation survey also shows declines in equity and fixed-income allocations.

Stock and stock fund allocations declined by 1.1 percentage points to 66.8%. August was the 53rd consecutive month that equity allocations were above their historical average of 60.5%.

Bond and bond fund allocations pulled back by 0.4 percentage points to 17.3%. Bond and bond fund allocations have been between 17.0% and 18.0% during five out the past seven months. The historical average is 16.0%.

Cash allocations rebounded by 1.5 percentage points to 16.0%. The increase follows what had been the smallest allocation to cash since January 2000. (Cash allocations were 14.5% in July.) Even with the rebound, August was the 69th consecutive month that cash allocations were below their historical average of 23.5%.

Equity allocations were down for the second consecutive month after having set a 12-month high in June. The decline is modest: a cumulative two percentage points. The major stock indexes pulled back in August, before rebounding late in the month. Optimism about the short-term direction of the stock market fell throughout the month in our weekly Sentiment Survey and is now at an unusually low level.

Even though individual investors list concerns over Washington politics and, to a lesser extent, valuations as the primary factors influencing their outlook for stock prices, they don’t view bonds as being particularly attractive either. Many AAII members have previously described the ongoing low interest rate environment as causing them to invest in stocks over bonds. Last month’s decline in the 10-year Treasury bond’s yield likely did little to alter this sentiment.

August AAII Asset Allocation Survey results:

  • Stocks and stock funds: 66.8%, down 1.1 percentage points
  • Bonds and bond funds: 17.3%, down 0.4 percentage points
  • Cash: 16.0%, up 1.5 percentage points

August AAII Asset Allocation Survey details:

  • Stocks: 28.2%, down 5.5 percentage points
  • Stock funds: 38.5%, up 4.5 percentage points
  • Bonds: 3.5%, down 0.4 percentage points
  • Bond funds: 13.8%, unchanged

Historical Averages:

  • Stocks/Stock Funds: 60.5%
  • Bonds/Bond Funds: 16.0%
  • Cash: 23.5%

*The numbers are rounded and may not add up to 100%.

The AAII Asset Allocation Survey has been conducted monthly since November 1987 and asks AAII members what percentage of their portfolios are allocated to stocks, stock funds, bonds, bond funds and cash. The survey and its results are available online at: www.aaii.com/investor-surveys.

Want to weigh in? Take the survey yourself and see results online at www.aaii.com/assetallocationsurvey.

If you want to become an effective manager of your own assets and achieve your financial goals, consider a risk-free 30-day Trial AAII Membership.

 

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