Almost Half of Investors Maintained Allocations Despite Higher Interest Rates


Last month’s Asset Allocation Survey special question asked AAII members what impact the rise in interest rates was having on their portfolio allocation decisions. Slightly less than half of all respondents (48%) said they haven’t altered their portfolio in response to the higher rates. Among the reasons given were a focus on a long-term strategy, the increase in interest rates hasn’t been large enough or their bond allocation has already been adjusted for a rising interest rate environment.

Answers from the other respondents were very mixed. Nearly 10% said that they have raised cash. Certificates of deposit were specifically mentioned by 4% of respondents. Eight percent of respondents said they’ve reduced their bond allocations and 3% are avoiding bonds, while 6% have increased their fixed-income exposure. An additional 3% are postponing purchasing bonds for now. Slightly less than 3% said they’ve reduced their equity exposure because of interest rates, while 2% are buying stocks.

Here is a sampling of the responses:

  • “No impact. I set a desired asset allocation and am staying the course.”
  • “Nothing immediately, but I will probably move some cash into fixed-income instruments in the near future.”
  • “Moved from bonds and bond funds to cash, money market funds and fixed-return investments.”
  • “Holding/reducing bond exposure and have invested in short-term durations.”
  • “I don’t think there is enough inflation to be really concerned about my allocation of investments.”

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