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Cash Allocations Hit Five-Month High

Cash allocations rose to their highest level of the year last month, according to the April AAII Asset Allocation Survey. Individual investors’ allocations to stock and stock funds ticked down slightly from March’s multi-year high. Bond and bond fund allocations also declined.

Stock and stock fund allocations fell to 67.9%, down 0.7 percentage points. In March, equity allocations had been at their highest level since June 2007. Even with April’s decline, stock and stock fund allocations remain above their historical average of 60%, which has now continued for 25 consecutive months.

Bond and bond fund allocations decreased 0.3% to 16.2%. Despite the decline, April is the 11th consecutive month with fixed-income allocations at or above their historical average of 16%.

Cash allocations rose 1%, to 15.9%. This was the largest allocation to cash since November 2014 (16.8%). April was the 42nd consecutive month with cash allocations below their historical average of 24%.

The five-month high in cash allocation occurred as neutral sentiment (as measured by the weekly AAII Sentiment Survey) has stayed at or above 45% for four consecutive weeks. This is the longest such streak since 1989. Despite the higher allocation to cash, equity allocations remain above average as the major indexes remain near their record highs and bond yields are at low levels.

April AAII Asset Allocation Survey results:

  • Stocks and Stock Funds: 67.9%, down 0.7 percentage points
  • Bond and Bond Funds: 16.2%, down 0.3 percentage points
  • Cash: 15.9%, up 1.0 percentage points

April AAII Asset Allocation Details:

  • Stocks: 32.2%, down 0.6 percentage points
  • Stock Funds: 35.7%, down 0.1 percentage point
  • Bonds: 3.3%, down 0.6 percentage points
  • Bond Funds: 12.8%, up 0.3 percentage points

Historical Averages:

  • Stocks/Stock Funds: 60%
  • Bonds/Bond Funds: 16%
  • Cash: 24%

*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: http://www.aaii.com/investor-surveys.

 

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