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October AAII Asset Allocation Survey: Equity Allocations Decline to 14-Month Low

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Equity allocations among individual investors fell to a 14-month low, according to the October AAII Asset Allocation Survey. Bond allocations rose to levels not seen since last November, while cash allocations rose for the third consecutive month.

Stock and stock fund allocations fell by 2.6 percentage points to 64.1%. This is the smallest equity allocation since August 2014. Even with the decline, stock and stock fund allocations remained above their historical average of 60% for the 19th consecutive month and the 21st out of the past 22 months.

Bond and bond fund allocations increased 0.4 percentage points to 17.2%. This is an 11-month low. It is also the fourth consecutive month with fixed-income allocations above their historical average of 16%.

Cash allocations rose 2.1 percentage points to 18.7%, a five-month high. Even with the increase, October was the 35th consecutive month with cash allocations below their historical average of 24%.

Even though optimism about the short-term direction for stock prices increased in our weekly Sentiment Survey, many AAII members reduced their allocations to individual stocks last month. Differences in the composition of who took the respective surveys and the date at which they took the surveys may explain some of the differences between the results. Nonetheless, the overall decline in equity allocations suggests that some individual investors sought to reduce risk in reaction to the downward volatility that occurred last month.

October AAII Asset Allocation Survey results:

  • Stocks Total: 64.1%, down 2.6 percentage points
  • Bonds Total: 17.2%, up 0.5 percentage points
  • Cash: 18.7%, up 2.1 percentage points

October AAII Asset Allocation Survey details:

  • Stocks: 30.2%, down 3.7 percentage points
  • Stock Funds: 33.9%, up 1.2 percentage points
  • Bonds: 3.9%, down 0.2 percentage points
  • Bond Funds: 13.3%, up 0.7 percentage points

Historical Averages:

  • 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.

 

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