Asset Allocation Survey: 11-Month High for Stock Allocations

Individual investors’ allocations toward stocks and stock funds reached an 11-month high of 62.3% last month, according to the November AAII Asset Allocation Survey. The 2.1 percentage point rise represented the fourth consecutive increase in the amount of portfolio dollars allocated to equities. The historical average is 60%.

Bond and bond fund allocations were essentially unchanged at 21.8%. This was the 10th time in 11 months that fixed income allocations have exceeded 20%. The historical average is 15%.

Cash allocations fell 1.8 percentage points to 15.9%. This is the lowest amount of portfolio dollars held in cash since March 2000, when stock allocations reached 77%. The historical average is 25%.

The rise in stock and stock fund allocations corresponds with the data we’ve been seeing in our weekly Sentiment Survey. Bullish sentiment, expectations that stock prices will rise over the next six months, has been above its historical average for 12 consecutive weeks. Despite the increase, allocations to equities are not significantly above the historical average.

The drop in cash allocations is likely a result of both the low levels of interest rates and short-term optimism about the direction of stock prices.

This month’s special question asked whether age or expected return (including income generation) played a bigger role in determining how one’s portfolio was allocated. Respondents were essentially evenly split between citing age and expected return. A small percentage said both factors played an equal role in influencing how their portfolios are constructed.

Here is a sampling of the responses:

“Age now has a bigger role. My return expectations are lower since I do not need to take the risk.”
“I’m increasing bond exposure as I near retirement, but I’m still holding a higher proportion of stock funds than most people recommend for my age.”
“Expected long-term total return is my primary criteria for asset allocation, but that’s after I’ve set enough aside in money market and short-term bond funds to provide peace of mind.”
“Expected return – I have enough not worry about age.”
“My wife and I are both retired. Our primary investment objective is wealth preservation, but income generation does play a major role in determining our allocation.”

November Asset Allocation Results:

Stocks and Stock Funds: 62.3%, +2.1 percentage points
Bonds and Bond Funds: 21.8%, -0.3 percentage points
Cash: 15.9%, -1.8 percentage points

Asset Category Details

Stock Funds: 31.9%, +4.0 percentage points
Stocks: 30.5%, -1.9 percentage points
Bond Mutual Funds: 16.0%, -0.2 percentage points
Bonds: 5.9%, -0.1 percentage points

Historical Averages:

Stocks Total: 60%
Bonds Total: 15%
Cash: 25%

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: