AAII Asset Allocation Survey: Individual Investors Continue To Favor Equities In Portfolio Allocation

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by: AAII

Summary

Bond and bond fund allocations increased 0.6 percentage points.

Stock and stock fund allocations declined slightly.

Cash allocations have been slowly declining since February 2016.

Stock and stock funds accounted for 66.0% of the average individual investor portfolio, according to the January AAII Asset Allocation Survey. Cash allocations fell last month to 17.7% of the average investor portfolio, 5.8 percentage points below the long-term average of 23.5%. Cash allocations have been slowly declining since February 2016, when portfolio allocation to cash registered 21.3%. Over that same time frame, investor allocation to stocks rose from 61.5% of the average individual investor portfolio to 66.0% reported by members of the American Association of Individual Investors during January 2017.

Cash allocations declined by 0.2 percentage points to 17.7%. Cash allocations have registered below their historical average of 23.5% for the 62nd consecutive month.

Stock and stock fund allocations declined by a very modest 0.3 percentage points to 66.0%. January was the 46th consecutive month with equity allocations above their historical average of 60.6%.

Bond and bond fund allocations increased 0.6 percentage points to 16.4%. The historical average is 15.9%.

Last month's special question asked AAII members what, if any, allocation changes they expected to make this year. An equal percentage of respondents indicated that they planned to increase their allocation to equity, and that they were planning no change. Around 27% of respondents said they were happy with their allocation and were not planning any change. Around 27% of the respondents noted they were planning increasing their allocation to stocks and stock funds, while 12% were anticipating decreasing their allocation to equity. A total of 11% noted they were going to increase their bond positions, while 5% of the individual investors indicated they were going to reduce their allocation to bonds and bond funds. A total of 13% of the respondents indicated they were planning on increasing their cash allocation, while 6% noted they would decrease their cash allocation.

Here is a sampling of the responses:

  • "I increased my exposure to stocks and reduced my cash, as I don't see much value in holding cash other than for daily expenses and my emergency fund."
  • "None; my overweighting in stocks is due to recent market increases. Over time, the allocations will normalize when the market goes through a correction."
  • "I still think the best place to be is in stocks and plan to stay the course in stocks."
  • "Later this summer, I may invest more in stocks, depending on how the new president's plans for the economy are accepted and implemented."
  • "Reduce my allocation to individual stocks. Am uncertain about the new administration."
  • "I expect to maintain my 60/40 position."
  • "Increase cash somewhat to get about three years of living expenses in cash. I'm migrating to Cloonan's "Level 3" approach."

January AAII Asset Allocation Survey results

  • Stocks and stock funds: 66.0%, down 0.3 percentage points
  • Bonds and bond funds: 16.4%, up 0.6 percentage points
  • Cash: 17.7%, down 0.2% percentage points

Note: Figures may not add to 100% due to rounding.

January AAII Asset Allocation Survey details

  • Stocks: 31.2%, up 1.2 percentage points
  • Stock funds: 34.8%, down 1.6 percentage points
  • Bonds: 3.4%, up 0.6 percentage points
  • Bond funds: 13.0%, unchanged
  • Cash: 17.7%, down 0.2% percentage points

Historical Averages

  • Stocks and stock funds: 60.6%
  • Bonds and bond funds: 15.9%
  • 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. The survey and its results are available online here.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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