December AAII Asset Allocation Survey: Equity Allocations Reach 6 1/2 Year High


Equity allocations among individual investors reached their highest level in 6 1/2 years last month, according to the December AAII Asset Allocation Survey. At the same time, fixed-income allocations fell to their lowest level in 4 1/2 years and cash allocations fell to a three-year low.

Stock and stock fund allocations rose by 4.1 percentage points to 68.3%. This is the largest allocation to equities since June 2007, when stock and stock fund allocations reached 68.6%. December was also the ninth consecutive month, and the 11th out of the past 12, with equity allocations above their historical average of 60%.

Bond and bond fund allocations fell 2.1 percentage points to 15.2%. This is the smallest fixed-income allocation since May 2009, when bond and bond fund allocations were 14.2%. December was also the first time in the past 54 months when fixed-income fund allocations were below their historical average of 16%.

Cash allocations fell 2.0 percentage points to 16.5%. This is the smallest allocation to cash since November 2010, when cash allocations were 15.9%. December was also the 25th consecutive month with cash allocations below their historical average of 24%.

The multi-year high in stock allocations coincides with both the record highs set by the Dow Jones industrial average and the S&P 500 and the highest level of optimism recorded by our Sentiment Survey since January 6, 2011. Also playing a role are higher bond yields. Though AAII members are optimistic about the direction of stock prices, concerns about the macro environment (slow economic growth, elevated stock valuations, etc.) have not gone away.

December’s special question asked AAII members how their current allocations compare to what they expected their portfolios to look like at the start of 2013. Slightly less than 30% of respondents said their current allocations are close to what they expected or are essentially unchanged from the start of 2013. A small number of respondents added that they rebalanced at some point last year. About 21% of respondents said they ended 2013 with larger equity allocations. Roughly 12% of respondents said their bond allocations are lower and an equal proportion said their cash allocations are higher.

Here is a sampling of the responses:

  • “In line with my expectations since I rebalance on occasion.”
  • “I increased my cash position because of the uncertainty.”
  • “Thought I might own more bonds than I do, but I hesitate to purchase them in the present market environment.”
  • “My allocation in stocks and stock funds is somewhat higher than I expected due to the favorable market this past year.”
  • “Taking cash and waiting for a pullback is just too tricky; I just ride things out.”

December AAII Asset Allocation Survey results:

  • Stocks and Stocks Funds: 68.3%, up 4.1 percentage points
  • Bonds and Bond Funds: 15.2%, down 2.1 percentage points
  • Cash: 16.5%, down 2.0 percentage points

December AAII Asset Allocation Survey details:

  • Stock Funds: 35.0%, up 0.3 percentage points
  • Stocks: 33.3%, up 3.8 percentage points
  • Bond Funds: 11.9%, down 2.0 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:


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