October AAII Association Survey: Equity and Fixed-Income Allocations Decline


Both equity and fixed-asset allocations declined slightly in the October AAII Asset Allocation Survey.

Stock and stock fund allocations slipped 0.2 percentage points to 59.9%. This is the first time equity allocations have been below 60% since July 2012. Even with the decline, however, stock and stock fund allocations remain close to their historical average of 60%.

Bond and bond fund allocations declined 0.6 percentage points to 21.3%. Though this is a three-month low, it is also the 40th consecutive month that fixed-income allocations are above their historical average of 16%.

Cash allocations rose 0.8 percentage points to 18.8%, a three-month high. Even with the increase, cash allocations are below their historical average of 24% for the 11th consecutive month.

Unusually high levels of pessimism about the short-term outlook for stocks did not cause individual investors to alter their portfolio allocations much. Many of our members follow long-term allocation strategies. Plus, low yields remain a source of frustration for income-seeking investors. The increase in cash may be a move by some to increase reserves in case stock prices should pullback in the short term.

This month’s special question asked AAII members what, if any, changes they will make to their portfolios because of the uncertainty over 2013 taxes. The overwhelming majority of respondents said they would not make any changes. Some said there is too much uncertainty to make any decision. A small proportion of respondents said they will take capital gains this calendar year or otherwise raise cash.

Here is a sampling of the responses:

  • “No one knows how this will play out, so steady as she goes.”
  • “Probably none. My stock mutual funds are in a 401(k) account and my stocks are in an IRA.”
  • “None. A very high percentage of my portfolio is in tax-deferred accounts.”
  • “None, until our illustrious political leaders make some kind of decision about those rates.”
  • “I will be harvesting more capital gains this year to avoid the upcoming tax increases.”
  • “None. Pray that sanity prevails.”

October AAII Asset Allocation Survey results:

  • Stocks/Stock Funds: 59.9%, down 0.2 percentage points
  • Bonds/Bond Funds: 21.3%, down 0.6 percentage points
  • Cash: 18.8%, up 0.8 percentage points

October AAII Asset Allocation Survey details:

  • Stocks: 31.3%, up 1.1% percentage points
  • Stock Funds: 28.6%, down 1.3 percentage points
  • Bonds: 4.6%, down 0.7 percentage points
  • Bond Funds: 16.7%, up 0.1 percentage points

Historical Averages:

  • Stocks/Stock Funds: 60%
  • Bonds/Bond Funds: 16%
  • Cash: 24%

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.

Charles Rotblut. CFA is a Vice President with the American Association of Individual Investors and editor of the AAII Journal.