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December AAII Asset Allocation Survey: Largest Equity Allocation Since 2000

Individual investors ended 2017 with their largest exposure to equities in 16½ years, according to the December AAII Asset Allocation Survey. At the same time, cash allocations fell further.

Stock and stock fund allocations rose 3.4 percentage points to 72.0%. Equity allocations were last higher in July 2000 (74.0%). December was the 57th consecutive month that equity allocations were above their historical average of 60.5%.

Bond and bond fund allocations declined 2.6 percentage points to 15.0%. Fixed-income allocations were last at this level in June 2017. The historical average is 16.0%.

Cash allocations declined 0.8 percentage points to 13.0%. Cash allocations were last lower in December 1999 (12.0%). December was the 73rd consecutive month that cash allocations were below their historical average of 23.5%.

There have only been 38 months with equity allocations at or above 70% during the 30-year history of our asset allocation survey. Last month’s reading is partially a reflection of the ongoing bull market in equities and last year’s high returns for stocks. These factors combined have boosted the value of stock holdings.

Also playing a role are low interest rates and increased optimism among individual investors about the short-term direction of the stock market. Bullish sentiment in our weekly Sentiment Survey ended the year at an unusually high level of 52.6%.

December AAII Asset Allocation Survey results:

  • Stocks and stock funds: 72.0%, up 3.4 percentage points
  • Bonds and bond funds: 15.0%, down 2.6 percentage points
  • Cash: 13.0%, down 0.8 percentage points

December AAII Asset Allocation Survey details:

  • Stocks: 32.4%, up 3.4 percentage points
  • Stock funds: 39.6%, up 0.1 percentage points
  • Bonds: 2.9%, down 1.0 percentage points
  • Bond funds: 12.0%, down 1.7 percentage points

Historical Averages:

  • Stocks/Stock Funds: 60.5%
  • Bonds/Bond Funds: 16.0%
  • Cash: 23.5%

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.

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