AAII Asset Allocation Survey: Investors Warming Up to Stocks

Individual investors increased their stock and stock fund holdings last month, according to the April AAII Asset Allocation Survey. Allocations to equities and equity-based funds rose 1.5 percentage points to 62.9%. This was the seventh consecutive month that stock and stock fund allocations were above their historical average of 60%.

Fixed-income allocations fell 2.0 percentage points. Individual investors held 18.6% of their portfolios in bonds and bond funds. Even with the decrease, April marked the 23rd consecutive month that fixed-income allocations were above their historical average of 15%.

Cash allocations edged up 0.5 percentage points to 18.5%. April was the 10th consecutive month that cash holdings were below their historical average of 25%.

Despite last month’s changes, equity and fixed-income allocations remained largely within the range that has existed since last November. The relative level of stability in portfolio holdings is not surprising given that our Sentiment Survey has been showing a cautious level of optimism, with both bullish and bearish sentiment near their historical averages. Furthermore, individual investors continue to face the crosswinds of improving corporate earnings, an economy that is improving at an uneven pace, rising fuel and food prices, and concerns about the direction of interest rates.

April Asset Allocation Survey Results

  • Stocks/Stock Funds: 62.9%, up 1.5 percentage points
  • Bonds/Bond Funds: 18.6%, down 2.0 percentage points
  • Cash: 18.5%, up 0.5 percentage points

Asset Category Details

  • Stocks: 27.8%, down 0.9% percentage points
  • Stock Funds: 35.1%, up 2.3 percentage points
  • Bonds: 3.2%, down 1.2 percentage points
  • Bond Funds: 15.4%, down 0.7 percentage points

Historical Averages

  • Stocks/Stock Funds: 60%
  • Bonds/Bond Funds: 15%
  • Cash: 25%

Charles Rotblut is the author of the new book Better Good than Lucky: How Savvy Investors Create Fortune with the Risk-Reward Ratio. 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/assetallocationsurvey