June AAII Asset Allocation Survey: Highest Equity Allocations Since February

Summary

• Stocks and Stock Funds: 63.2%, up 2.4 percentage points.
• Bonds and Bond Funds: 18.3%, down 0.9 percentage points.
• Cash: 18.4%, down 1.6 percentage points.

Individual investors’ exposure to equities reached a four-month high in June according to the latest AAII Asset Allocation Survey. Fixed-income allocations, meanwhile, declined to an eight-month low.

Stock and stock fund allocations increased by 2.4 percentage points to 63.2%. Equity allocations were last higher in February 2020 (66.1%). The historical average is 61.0%.

Bond and bond fund allocations pulled back by 0.9 percentage points to 18.3%. Fixed-income allocations were last at this level in October 2019. Even with the decrease, bond and bond fund allocations are above their historical average of 16.0% for the 16th consecutive month and the 17th time in 18 months.

Cash allocations declined 1.6 percentage points to 18.4%. This is the first time cash allocations have been below 20% since February 2020 (14.8%). The historical average is 23.0%.

The increase in equity allocations comes as the stock market experienced its best quarterly performance since 1998. Despite the ongoing rebound, optimism among individual investors about the short-term direction of stocks remained below average throughout June in our weekly sentiment survey.

Last month’s Asset Allocation Survey special question asked AAII members which asset class they would allocate to if they could add new money to their investment accounts.

Nearly one out of three respondents (31%) say they would add stocks while 22% say they would add stock funds. About 8% say they would add bonds and 9% say they would add bond funds. This compares to 19% of respondents who say they would add more cash, money market funds or certificates of deposit (CDs). Additionally, 6% of respondents say that they would add exchange-traded funds (OTC:ETFS) and 4% say they would add cryptocurrencies, precious metals or gold/silver. Finally, 1% of respondents state that they would maintain their current allocations.

Many respondents gave more than one answer.

Here is a sampling of the responses:

• “Stock funds. I’m following AAII founder James Cloonan’s suggestion to invest in equities when the market is lower than 95% of its all-time high.”
• “At this time, I am trying to build up cash in order to take advantage of anticipated future downside volatility.”
• “I’m gradually going out of cash into equity ETFs. By using some leveraged ETFs, I can still maintain a relatively high cash position. I’m currently up about 5% for the year.”
• “If I do put money in, it will only be for very large-cap companies with a long history of being able to generate consistently increasing yearly net income. The next 18 months look very scary and unpredictable regardless of what the analysts say. Their crystal ball is not any better than mine.”

June AAII Asset Allocation Survey results:

• Stocks and Stock Funds: 63.2%, up 2.4 percentage points
• Bonds and Bond Funds: 18.3%, down 0.9 percentage points
• Cash: 18.4%, down 1.6 percentage points

June AAII Asset Allocation Survey details:

• Stocks: 27.9%, up 1.7 percentage points
• Stock Funds: 35.4%, up 0.7 percentage points
• Bond Funds: 15.3%, down 0.3 percentage points
• Bonds: 3.0%, down 0.6 percentage points

Historical Averages:

• Stocks/Stock Funds: 61.0%
• Bonds/Bond Funds: 16.0%
• Cash: 23.0%

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: https://www.aaii.com/investor-surveys.

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