Last month’s Asset Allocation Survey special question asked AAII members whether there are any portfolio changes they are postponing until the after the first rate hike by the Federal Reserve is announced. The majority of respondents (62%) said “no.” Many of these members said that they follow long-term strategies or that they make buy and sell decisions based on the attributes of individual securities and funds. Others said that the first rate hike is already priced in or that it will not have any lasting impact.
About 20% said that they are waiting for a change in monetary policy before taking certain investment actions. Several of these respondents specifically said that they are postponing buying bonds or bond funds. Some respondents said that they intended to increase their equity allocations once the first rate hike is announced.
Here is a sampling of the responses:
- “No, I’m a long-term investor and not a market timer.”
- “No, the rate change should be small and the market has already taken it into account.”
- “No, because the fundamentals of a company are more important than interest rates.”
- “I will reallocate some cash to bonds after interest rates increase.”
- “Yes, purchasing more bonds after the Fed raises rates.”