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May AAII Asset Allocation Survey: Fixed-Income Falls to a Two-Year Low

Individual investors’ fixed-income allocations fell to a two-year low last month, according to the May AAII Asset Allocation Survey. Both equity and cash allocations rose.

Stock and stock fund allocations rebounded by 2.1 percentage points to 67.4%. The rise puts equity allocations at their second-highest level of the year. May was the 50th consecutive month that equity allocations were above their historical average of 60.5%.

Bond and bond fund allocations fell 2.5 percentage points to 15.5%. Fixed-income allocations were last at this level during the three-month span of May through July 2015. The historical average is 16.0%.

Cash allocations increased by a modest 0.4 percentage points to 17.2%. May was the 66th consecutive month that cash allocations were below their historical average of 23.5%.

Yields on the benchmark 10-year Treasury note generally declined last month, while the S&P 500 index and the NASDAQ set new highs. Expectations for a short-term increase in stock prices remained below average throughout the month, according to our weekly Sentiment Survey. At the same time, low yields and the potential for the Federal Reserve to raise interest rates further continue to reduce the appeal of bonds in the eyes of many individual investors.

May AAII Asset Allocation Survey:

  • Stocks and stock funds: 67.4%, up 2.1 percentage points
  • Bonds and bond funds: 15.5%, down 2.5 percentage points
  • Cash: 17.2%, up 0.4 percentage points

May AAII Asset Allocation Survey details:

  • Stocks: 34.7%, up 0.4 percentage points
  • Stock Funds: 32.7%, up 1.7 percentage points
  • Bonds: 4.1%, down 1.6 percentage points
  • Bond Funds: 11.4%, down 1.0 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 http://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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