July AAII Asset Allocation Survey: Bond Allocations Decline to 4-Year Low


A decline in bond and bond fund holdings put fixed-income allocations at their lowest level since June 2009, according to the July AAII Asset Allocation Survey. Equity allocations increased as individual investors shifted money out of cash.

Stock and stock fund allocations rebounded by 3.1 percentage points to 65.2%, matching May’s levels. Equity allocations have now been above their historical average of 60% for four consecutive months and six out of the past seven months.

Bond and bond fund allocations declined 0.1 percentage points to 17.1%. This was the smallest allocation to bonds since June 2009. Nonetheless, fixed-income allocations were above their historical average of 16% for the 49th consecutive month.

Cash allocations pulled back by 3.0 percentage points to 17.7%. July was the 20th consecutive month with cash allocations below their historical average of 24%.

A rebound in stock prices and new record highs for the S&P 500 caused individual investors to view equities more favorably, at least from a short-term standpoint. On the fixed-income side, despite industry reports of continued outflows from bond funds, AAII members largely kept their allocations unchanged last month. This may reflect the long-term strategy that many of our members use to manage their portfolio allocations.

Last month’s special question asked AAII members how their allocation to emerging markets has changed this year. Slightly more than half of respondents (53%) said there was little to no change in their allocation. Included in this group are those who explicitly said they didn’t have exposure to emerging markets (about 10% of all respondents). Nearly a quarter of respondents (23%) said they either have less exposure or completely ended their emerging market exposure this year. Some respondents observed that the change in allocation was due to the comparatively stronger performance of U.S. securities (as opposed to an active decision on their part). Just 12% of respondents said they increased their emerging market exposure this year.

July AAII Asset Allocation Survey results:

  • Stocks/Stock Funds: 65.2%, up 3.1 percentage points
  • Bonds/Bond Funds: 17.1%, down 0.1 percentage points
  • Cash: 17.7%, down 3.0 percentage points

July AAII Asset Allocation Survey details:

  • Stock Funds: 32.4%, up 1.7 percentage points
  • Stocks: 32.8%, up 1.4 percentage points
  • Bond Funds: 13.4%, down 0.1 percentage points
  • Bonds: 3.6%, down 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.


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