November’s Asset Allocation Survey special question asked AAII members how the coming end of the Federal Reserve’s bond-buying program influenced their thoughts about allocating to bonds or bond funds. More than half of all respondents (53%) said the announcement had no impact. An additional 14% said they do not own fixed-income investments or are avoiding them. Approximately 7% said they are not adding to their fixed-income allocations or are reducing their allocations. Roughly 6% said they may either buy bonds or bond funds or are prepared to do so if interest rates rise.
Here is a sampling of the responses:
- “No effect whatsoever. I keep a short five-year ladder of Treasury notes only.”
- “Not much impact. [The bond-buying program] was unlikely to continue too much longer and I think that the market realized that.”
- “Will not invest in bonds. Rising interest rates = lower bond prices.”
- “Expected [the bond-buying program to end] for the last year, so had little effect as I’m already in short- to medium-term funds.”
- “I will continue to stay light in bonds. Returns are just not that terrific.”
- “I may take advantage of buying opportunities in the coming years as prices fall and yields rise as I tend to hold to maturity.”