Members Mostly Staying Steady With Allocations


Last month’s Asset Allocation Survey special question asked AAII members how their current allocation compares to their expectations. More than four out of 10 respondents (42%) said their current allocation is either about the same or matches their intended strategy. Slightly more than 17% said they are holding more cash than anticipated. About 8% said they have a higher-than-anticipated exposure to equities. Similar numbers of respondents (6% each) said they have less in equities or less in bonds than expected.

Here is a sampling of the responses:

  • “About the same. I rebalance twice a year.”
  • “Less in stocks and bonds due to market volatility.”
  • “About the same. I don’t change my allocation much year to year.”
  • “Much less bonds. I’m not replacing matured bonds.”
  • “More cash than I would have thought.”

2 Replies to “Members Mostly Staying Steady With Allocations”

  1. I need information on how to best invest in fixed income investments/bonds in the current market. I’d appreciate links (URLs) to articles within (or outside of) the AAII site. One issue of concern is how can I protect myself against “interest rate risk” (i.e. when the general interest rate level goes up, the market price of existing bonds usually goes down, roughly in proportion). How can I shift a sizable (20-40% or more) part of my portfolio to bonds in the current environment without losing as interest rates rise in the future? Thanks for any references that could help resolve this issue.

    1. GMS,

      First, consider two things when thinking about bonds: Nobody knows the magnitude of which or the timing of when interest rates will rise. Furthermore, if you hold a bond to maturity, you will get receive the face value of the bond plus all interest payments regardless of what happens to interest rates.

      As far as articles about buying bonds, we’ve run several over the years. Here are a few that may be of interest:
      Understanding What Bond Market Liquidity Means for Your Portfolio
      Defined-Maturity Funds: A Bond Alternative With Compromises
      Should You Maintain an Allocation to Bonds When Current Rates Are Low?
      Why Buy Bonds If Interest Rates Will Rise?

      -Charles Rotblut


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