October AAII Asset Allocation Survey: Cash Allocations Rise to a 5-Month High


Individual investors’ cash allocations rebounded to a five-month high last month, according to the October AAII Asset Allocation Survey. Fixed-income allocations also rose, while equity allocations declined.

Stock and stock fund allocations declined 0.6 percentage points, to 64.7%. Even with the small decrease, equity allocations remained above their historical average of 60.5% for the 43rd consecutive month.

Bond and bond fund allocations rebounded 0.3 percentage points to 16.6%. October was the 15th consecutive month that fixed-income allocations were above their historical average of 16.0%.

Cash allocations rose 0.4 percentage points, to 18.7%. This is the largest allocation to cash since May 2016. Even with the rise, cash allocations remained below their historical average of 23.5% for the 59th consecutive month.

The increase in cash precedes the November elections. In addition to the election, some individual investors believe stocks could fall further than they have during the third quarter. Beyond the election, potential interest rate hikes and valuations are cited as catalysts for a potential drop in stock prices. It is worth noting that over the past six weeks, only 25.3% of AAII members described their six-month outlook for stock prices as bullish—an unusually low level of optimism.

Despite the lack of optimism, several AAII members previously said that they see no good alternatives to stocks currently existing or have otherwise said that they feel like they are being forced to allocate more to stocks because of the current interest rate environment.

October AAII Asset Allocation Survey results:

  • Stocks and stock funds: 64.7%, down 0.6 percentage points
  • Bonds and bond funds: 16.6%, up 0.3 percentage points
  • Cash: 18.7%, up 0.4 percentage points

October AAII Asset Allocation Survey details:

  • Stocks: 30.4%, down 0.6 percentage points
  • Stock Funds: 34.3%, unchanged
  • Bonds: 3.7%, up 0.7 percentage points
  • Bond Funds: 12.9%, down 0.4 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.

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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