July Asset Allocation: Members Mixed on Portfolio Changes

Posted on August 3, 2015 | AAII Survey, Asset Allocation

Last month’s Asset Allocation Survey special question asked AAII members what, if any, allocations they expect to make during the second half of the year. Responses were mixed. The largest group, representing 28% of all respondents, did not anticipate making any changes. Many of them said they are following a long-term strategy. Nearly 20% of respondents expect to shift money into stocks or stock funds, particularly if there is a notable market drop. About 12% of respondents expect to boost their cash holdings, while 11% think they will reduce the amount held in cash. Approximately 10% say they will increase their fixed-income holdings. Several members said they may reallocate within a given asset category, with several mentioning the possibility of increasing exposure to international stocks.



July AAII Asset Allocation Survey: Portfolios Mostly Unchanged Despite Higher Volatility

Posted on August 3, 2015 | AAII Survey, Asset Allocation

Higher levels of stock market volatility did not cause many individual investors to alter their portfolio allocations, according to the July AAII Asset Allocation Survey. Rather, allocations among stocks, bonds and cash changed only modestly.

Stock and stock fund allocations rebounded by 0.2 percentage points to 67.4%, following modest declines during the previous two months. The small increase resulted in stock and stock fund allocations staying above their historical average of 60% for the 28th consecutive month.

Bond and bond fund allocations were essentially unchanged for the third consecutive month, holding steady at 15.5%. As was the case in June, the changes in bond fund and bond allocations were very minor (and largely unnoticeable after the results were rounded). July was the third consecutive month with fixed-income allocations below their historical average of 16.0%.

Cash allocations edged down 0.1%, to 17.2%. This was the first time that cash allocations stayed above 17.0% on consecutive months since March 2014 through June 2014. Last month was the 44th consecutive month with a cash allocation reading below its historical average of 24%.

The increased volatility in the stock market and the corresponding weekly swings in our Sentiment Survey did not result in many changes being made to the portfolios of AAII members. Though some members are concerned about the possibility of a sizeable decline in stock prices occurring, many remain frustrated with the continuing low level of interest rates.

Here is a sampling of the responses:

  • “Any changes made to allocations will depend on what the market does.”
  • “I expect to make no significant allocation changes during the balance of 2015.”
  • “Use cash to purchase stocks upon any significant market correction.”
  • “Slowly increase bond holdings, including funds.”

July AAII Asset Allocation Survey Results:

  • Stocks and Stock Funds: 67.4%, up 0.2 percentage points
  • Bond and Bond Funds: 15.5%, no change
  • Cash: 17.2%, down 0.1 percentage points

July AAII Asset Allocation details:

  • Stocks: 33.0%, down 0.6 percentage points
  • Stock Funds: 34.4%, up 0.9 percentage points
  • Bonds: 3.7%, down 0.1 percentage points
  • Bond Funds: 11.8%, no change

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.



AAII Members Talk Alternative Investments

Posted on July 1, 2015 | AAII Survey, Asset Allocation

June’s Asset Allocation Survey special question asked AAII members if any portion of their portfolio is allocated to alternative investments (something we do not track in our monthly survey). Almost half of all respondents (49%) said no, they do not hold any alternative investments. Some said they have no interest in owning them, while others suggested they needed to learn more about these types of investments before deciding to allocate to them. A small group of members asked us to define what counts as an alternative investment.

Slightly more than a third (35%) said they own alternative investments. Many described their allocations to “alts” as accounting for 10% or less of their total portfolio. Real estate was most common, with 15% of all respondents saying they had exposure to it either through real estate investment trusts (REITs) or via a direct ownership. One member has ownership in a vineyard.

Here is a sampling of the responses:

  • “I do not and will not consider ‘alternative investments.’”
  • “No, because I do not have enough information about ‘alternative investments’ for evaluation.”
  • “Not much…I tried silver, gold, stamps, and convertible bonds; no returns are as good as stocks.”
  • “Yes, about 8% to 10% of my portfolio is in ‘alternative investments.’”


June AAII Asset Allocation Survey: Cash Levels Continue to Rise

Posted on July 1, 2015 | AAII Survey, Asset Allocation

The June AAII Asset Allocation Survey reveals that individual investors increased their cash allocations for the third consecutive month. The rise in cash levels occurred as equity allocations fell to their lowest level since January.

Stock and stock fund allocations declined 0.5 percentage points to 67.2%. June tied January for having the smallest allocation to equities in 2015. Nonetheless, stock and stock fund allocations remained above their historical average of 60% for the 27th consecutive month.

Bond and bond fund allocations were unchanged at 15.5%. Technically bond fund allocations declined and bond allocations rose, but the changes were very minor. June was the second consecutive month with fixed-income allocations below their historical average of 16.0%.

Cash allocations edged up 0.5%, to 17.3%. This third consecutive monthly increase kept cash allocations at their highest level since October 2014 (18.7%). The increase was not large enough to keep cash allocations from being below their historical average of 24% for the 43rd consecutive month, however.

The rising level of cash corresponds with trends we’ve been seeing in our weekly Sentiment Survey. Neutral sentiment has been at an unusually high level for 12 consecutive weeks. Neutral sentiment’s record streak of consecutive weekly readings at or above 45% for 10 consecutive weeks lasted through much of last month. At the same time, many individual investors continue to be frustrated by the ongoing low-interest-rate environment.

June AAII Asset Allocation Survey results:

  • Stocks and Stock Funds: 67.2%, down 0. 5 percentage points
  • Bonds and Bond Funds: 15.5%, unchanged
  • Cash: 17.3%, up 0.5 percentage points

June AAII Asset Allocation Survey details:

  • Stock Funds: 33.5%, down 1.1 percentage points
  • Stocks: 33.6%, up 0.6 percentage points
  • Bond Funds: 11.8%, down 0.1 percentage points
  • Bonds: 3.8%, up 0.1 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.

 



Interest Rates, Low Yields Affect Members’ Bond Allocations

Posted on June 2, 2015 | AAII Survey, Asset Allocation

May’s Asset Allocation Survey special question asked AAII members what predominately influences their decision to increase or reduce exposure to bonds and bond funds. About 38% of respondents said interest rates influence their bond allocation. Approximately 13.9% said that current low yields affect their decision. Roughly 12% of respondents noted that they do not allocate to bonds at all. Other responses were evenly distributed among factors such as market volatility, market valuations or behavior, expected withdrawal, rebalancing and the economy.

Here is a sampling of the responses:

  • “I will invest in bond funds when I feel the value in security outweighs the risks of owning only stocks.”
  • “I’ve been staying away from bonds for several years, I just don’t like their dynamics right now.”
  • “My allocation of bonds is based on current economic conditions and my portfolio mix.”
  • “Interest rates. I buy bonds and hold them to maturity. When interest rates are so low that utility stocks are clearly a better buy, I don’t renew in bonds.”


Stock and Stock Fund Allocations Fall to Below-Average Levels

Posted on June 2, 2015 | AAII Survey, Asset Allocation

Fixed-income allocations fell to their lowest level in a year, as individual investors remain frustrated with low interest rates. Cash allocations, meanwhile, rose for a second consecutive month as equity allocations declined.

Stock and stock fund allocations declined 0.2 percentage points to 67.7%, the lowest level since January. Even with the decline, equity allocations remained above their historical average of 60% for the 26th consecutive month.

Bond and bond fund allocations fell 0.7 percentage points, to 15.5%. Fixed-income allocations were last lower in December 2013 (15.2%). The historical average is 16.0%.

Cash allocation rose 1.0 percentage points, to 16.9%. Cash allocations were last higher in October 2014 (18.7%). Despite the increase, May was the 42nd consecutive month with cash allocations below their historical average of 24%.

The rise in cash allocations occurred as neutral sentiment (as measured by the weekly AAII Sentiment Survey) has stayed at or above 45% for eight consecutive weeks and above average for 21 consecutive weeks. Though cash allocations have risen for two consecutive weeks, allocations to stocks and stock funds remain high as investors fret over low interest rates and see a lack of attractive alternatives for their portfolio dollars. Speculation about an interest rate increase occurring this year may also have contributed to the decline in fixed-income allocations.

May AAII Asset Allocation Survey results:

  • Stock and Stock Funds: 67.7%, down 0.2 percentage point
  • Bond and Bond Funds: 15.5%, down 0.7 percentage point
  • Cash: 16.9%, up 1.0 percentage point

May AAII Asset Allocation Details:

  • Stocks: 33.1%, up 0.9 percentage point
  • Stock Funds: 34.6%, down 1.1 percentage points
  • Bonds: 3.6%, up 0.3 percentage point
  • Bond Funds: 11.8%, down 1.0 percentage point

*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.



APRIL 2015 AAII ASSET ALLOCATION MODELS UPDATED

Posted on April 15, 2015 | Asset Allocation

STOCKS – 1 YEAR

Large-Cap Stocks: 12.81%
Mid-Cap Stocks: 11.83%
Small-Cap Stocks: 10.37%
International Stocks: 0.87%
Emerging Markets Stocks: 10.35%

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March 2015 AAII ASSET ALLOCATION MODELS UPDATED

Posted on March 15, 2015 | Asset Allocation

STOCKS – 1 YEAR

Large-Cap Stocks: 12.56%
Mid-Cap Stocks: 11.75%
Small-Cap Stocks: 9.66%
International Stocks: -1.29%
Emerging Markets Stocks: 2.90%

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FEBRUARY 2015 AAII ASSET ALLOCATION MODELS UPDATED

Posted on February 15, 2015 | Asset Allocation

STOCKS – 1 YEAR

Large-Cap Stocks: 15.33%
Mid-Cap Stocks: 10.70%
Small-Cap Stocks: 8.04%
International Stocks: -0.39%
Emerging Markets Stocks: 9.14%

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JANUARY 2015 AAII ASSET ALLOCATION MODELS UPDATED

Posted on January 15, 2015 | Asset Allocation

STOCKS – 1 YEAR

Large-Cap Stocks: 14.04%
Mid-Cap Stocks: 10.46%
Small-Cap Stocks: 7.26%
International Stocks: -0.40%
Emerging Markets Stocks: 9.02%

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