July AAII Asset Allocation Survey: Cash Allocations Fall to 17½-Year Low


Last month, individual investors’ proportionate cash allocations were the smallest they’ve been in 17½ years. The July AAII Asset Allocation Survey also showed a small decline in equity holdings and a rebound in fixed-income holdings.

Stock and stock fund allocations pulled back by 0.9 percentage points 67.9%. The modest decline follows what had been a 12-year high for equity allocations. July was the 52nd consecutive month that equity allocations were above their historical average of 60.5%.

Bond and bond fund allocations rose 2.7 percentage points to 17.7%. The rebound follows what had been an eight-month low for fixed-income allocations in June. Bond and bond fund allocations have been between 17.0% and 18.0% during four out the past six months. The historical average is 16.0%.

Cash allocations fell 1.8 percentage points to 14.5%. This is the smallest allocation to cash since January 2000 (14.0%). July was the 68th consecutive month that cash allocations were below their historical average of 23.5%.

In June, we asked survey respondents what determines how much they allocate to cash. More than three out of five respondents (62%) said projected needs [required minimum distributions (RMDs), living expenses, emergencies, etc.] and/or future investment opportunities. Nearly 26% said their cash allocations were primarily determined by their short-term expectations for the stock market.

Nothing occurred in July that would lead us to believe these reasons have changed. Cash allocations were below 17% three times between March and June. In addition, differences in the composition of the group of AAII members who take the Asset Allocation Survey on a month-to-month basis can cause some fluctuations in the results.

Yields on the benchmark 10-year Treasury bond were generally higher in July than in June. At the same time, the major stock indexes set new highs in July. Many AAII members have described the ongoing low interest rate environment as making bonds look unattractive and pushing them to allocate more to stocks instead. Individual investors, in aggregate, aren’t overly enthusiastic about the short-term outlook for stocks, however. The percentage of investors describing their short-term outlook as “neutral” largely stayed a little above 40% throughout July.

July AAII Asset Allocation Survey results:

  • Stocks and stock funds: 67.9%, down 0.9 percentage points
  • Bonds and bond funds: 17.7%, up 2.7 percentage points
  • Cash: 14.5%, down 1.8 percentage points

July AAII Asset Allocation Survey details:

  • Stocks: 33.8%, up 0.2 percentage points
  • Stock funds: 34.1%, down 1.1 percentage points
  • Bonds: 3.9%, up 1.3 percentage points
  • Bond funds: 13.8%, up 1.3 percentage points

Historical Averages:

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

*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.

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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