Posted on December 3, 2013 | AAII Survey
Allocations to stocks and stock funds declined last month after having reached a six-year high in October, according to the November AAII Asset Allocation Survey. Fixed income and cash allocations both increased.
Stock and stock fund allocations declined 2.1% to 64.2%. November was the eighth consecutive month, and the 10th out of the past 11, with equity allocations above their historical average of 60%.
Bond and bond fund allocations increased by 0.4 percentage points to 17.3%. Though it is the second consecutive monthly increase, fixed income allocations are only back to their August 2013 levels. Bond and bond fund allocations have now been above their historical average of 16% for 52 out of the last 53 months.
Cash allocation rebounded by 1.6 percentage points to 18.5%. Even with the increase, November was the eighth month in the past 11 months with a cash allocation reading below 20%. November was also the 24th consecutive month with cash allocation below its historical average of 24%.
The record highs set by the Dow Jones industrial average and the S&P 500 are also contributing to the above-average equity allocations, and many individual investors are hopeful the rally will continue. Stock allocations did decline during the middle of the month, however, in part due to a dip in sentiment about the short-term direction of stock prices. Some AAII members also continue to fret about the macro environment (slow economic growth, fiscal uncertainty, elevated stock valuations, etc.).
November’s special question asked AAII members what percentage of their portfolio they allot to index mutual funds and ETFs. Approximately 28% of respondents said index funds account for between 1% and 25% of their portfolios. An additional 24% of respondents said they did not own any index funds. Slightly more than 19% of respondents use index funds for between 26% and 50% of their portfolios. At the other end of the spectrum, nearly 11% of respondents said index funds compose between 75% and 99% of their portfolios, and 8% solely used index funds.
November AAII Asset Allocation Survey results:
- Stocks and stock funds: 64.2%, down 2.1 percentage points
- Bonds and bond funds: 17.3%, up 0.4 percentage points
- Cash: 18.5%, up 1.6 percentage points
November AAII Asset Allocation Survey details:
- Stocks: 29.6%, down 1.1 percentage points
- Stock Funds: 34.7%, down 0.9 percentage points
- Bonds: 3.3%, unchanged
- Bond Funds: 13.9%, up 0.4 percentage points
- 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.