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August AAII Asset Allocation Survey: Equity Allocations Rise to a 13-Month High

Exposure to equities reached its highest level in 13 months last month, according to the August AAII Asset Allocation Survey. At the same time, cash allocations fell to their lowest level in more than a year and fixed-income allocations declined modestly.

Stock and stock fund allocations rose 2.5 percentage points, to 66.6%. This was the largest allocation to equities since July 2015 (67.4%). The rise kept stock and stock fund allocations above their historical average of 60.5% for the 41st consecutive month.

Bond and bond fund allocations pulled back by 0.6 percentage points, to 17.4%. The decline reverses July’s increase. Nonetheless, fixed-income allocations remained above their historical average of 16.0% for the 13th consecutive month.

Cash allocations fell 1.8 percentage points, to 16.0%. Cash allocations were last lower in April 2015 (15.9%). Last month’s drop kept cash allocations below their historical average of 23.5% for the 57th consecutive month.

Since reaching a three-year high in February, cash allocations have declined during five out of the past six months. Over the same period of time, equity and fixed-income allocations have mostly been range-bound. The two exceptions were July’s three-year high for bond and bond fund allocations and last month’s 13-month high for equity allocations.

In general, individual investors are frustrated by the low yields on bonds, the low interest rates paid by savings and money market accounts, and the high valuations of stocks. Several AAII members have expressed a view of no good alternatives to stocks currently existing or have otherwise said that they feel like they are being forced to allocate to more stocks because of the current interest rate environment. At the same time, optimism about the short-term direction of stock prices continues to be below average, according our weekly Sentiment Survey.

August AAII Asset Allocation Survey results:

  • Stocks and stock funds: 66.6%, up 2.5 percentage points
  • Bonds and bond funds: 17.4%, down 0.6 percentage points
  • Cash: 16.0%, down 1.8 percentage points

August AAII Asset Allocation Survey details:

  • Stocks: 32.6%, up 3.4 percentage points
  • Stock Funds: 33.9%, down 0.9 percentage points
  • Bonds: 3.7%, up 0.4 percentage points
  • Bond Funds: 13.7%, down 1.0 percentage points

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.

Want to weigh in? Take the survey yourself and see results online at: http://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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