AAII Survey: Are Current Market Conditions Affecting Attitudes on Diversification?


This past week the S&P 500 index made history with its longest stretch without a full 20% decline based on daily closing prices. The rise in U.S. stocks over the last nine years has been fueled by a rebounding U.S. economy, record-low interest rates and growing corporate earnings.

The gains in the stock market have also pushed valuations well above historic norms, but with interest rates still near historic lows, stocks still offer more attractive returns.

AAII Weekly Survey Question

With stock valuations on the rise but interest rates still relatively low, some are finding it increasingly difficult to diversify their portfolios.

To see how deep this sentiment runs among our readers, last week’s survey question asked:

How have market conditions affected your attitude on diversification?

In all, 916 readers participated.

More than three-quarters of our readers—77%—said they diversify using the same suite of investment vehicles regardless of market conditions.

Sixteen percent of readers said that current conditions make diversification more difficult while only 7% of readers said that current market conditions make diversification easier.

Weekly Special Question

Even though the vast majority of our readers use the same suite of investment to diversify no matter the market conditions, we were still curious to see what new steps, if any, they are taking to better diversify their portfolios.

So last week’s special question asked:

Are you looking for new ways to diversify your portfolio? If so, how?

In all, we received 87 responses. Among these respondents, very few say they are looking for new ways to diversify their portfolios.

Among those readers branching into new ways to diversify their portfolios, the most common vehicles are:

  • Alternative low-volatility investments
  • Real estate
  • Peer-to-peer lending
  • Bond ladders

Everybody has an opinion! Why not give us yours? Participate in our weekly member poll, updated every Monday, and see the results online at www.aaii.com/memberquestion.



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