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December AAII Asset Allocation Survey: Fixed-Income Allocations Reach 11-Month High

Individual investors ended 2015 with their largest bond exposure since last January, according to the December AAII Asset Allocation Survey. Equity and cash allocations were both slightly down.

Stock and stock fund allocations declined by 0.2 percentage points to 65.3%. The change was not large enough to prevent equity allocations from remaining above their historical average of 60% for a 33rd consecutive month.

Bond and bond fund allocations rose 0.4 percentage points to 17.1%. Fixed-income allocations were last higher in January 2015 (17.5%). Last month was also the fifth consecutive month with fixed-income allocations above their historical average of 16.0%.

Cash allocations declined 0.1 percentage points to 17.7%. Cash allocations have decreased for three consecutive months and now sit at a five-month low. Nonetheless, December was the 49th consecutive month with a cash allocation reading below its historical average of 24%.

Equity allocations continue to remain below their pre-correction levels. Neutral sentiment ended 2015 at its highest level of the year (51.5%). Furthermore, the proportion of individual investors describing their short-term outlook for stocks as “bullish” remained below 30% throughout all of December. Last month’s decline in equity prices likely had a negative impact on the reported levels of equity allocations as well.

December AAII Asset Allocation Survey results:

  • Stocks and stock funds: 65.3%, down 0.2 percentage points
  • Bonds and bond funds: 17.1%, up 0.4 percentage points
  • Cash: 17.7%, up 0.1 percentage points

December AAII Asset Allocation Survey details:

  • Stocks: 29.9%, down 2.7 percentage points
  • Stock funds:  35.4%, up 2.5% percentage points
  • Bonds: 4.0%, up 0.5 percentage points
  • Bond funds: 13.1%, down 0.2 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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