April AAII Asset Allocation Survey: Allocations Stay Unchanged Amid High Levels of Neutral Sentiment

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Investors kept their portfolio holdings essentially unchanged for the third consecutive month, according to the April AAII Asset Allocation Survey. Equity allocations remained above average while fixed-income allocations stayed below 16 percent for just the third time in five years.

Stock and stock fund allocations declined 0.2 percentage points to 67 percent. April was just the third month since September 2007 in which equity allocations were at or above 67 percent. Last month was also the 13th consecutive month and the 15th out of the past 16 with equity allocations above their historical average of 60 percent.

Bond and bond fund allocations declined 0.1 percentage points to 15.6 percent. This is just the third time since 2009 that fixed-income allocations are below their historical average of 16 percent.

Cash allocations increased by 0.3 percentage points to 17.4 percent. April was the 29th consecutive month with cash allocations below their historical average of 24 percent.

The lack of change in portfolio allocations is occurring at a time when a high percentage of individual investors describe their six-month expectations for stock prices as “neutral.” While many AAII members are neither predicting stocks to rise nor fall over the next six months, many are also not viewing bonds or cash as more attractive alternatives.

This month’s special question asked AAII members whether a correction in stock prices (a drop of at least 10 percent) or a 1 percentage point rise in bond yields would cause a bigger loss in their portfolio. Nearly 80 percent of all respondents said a correction in stock prices would cause a bigger loss.

The primary reason given as to why was a bigger allocation to stocks than to bonds (34 percent of all respondents). About 17 percent of respondents said they didn’t own bonds, while 10 percent of respondents said their bond holdings were short-term or had less sensitivity to interest rate fluctuations. Just 3 percent of respondents said a 1 percentage point rise in bond yields would hurt their portfolios more than a correction in stock prices would.

April Asset Allocation Survey results:

  • Stocks and stock funds: 67 percent, down 0.2 percentage points
  • Bonds and bond funds: 15.6 percent, down 0.1 percentage points
  • Cash: 17.4 percent, up 0.3 percentage points

April Asset Allocation Survey details:

  • Stocks: 32.7 percent, up 1.7 percentage points
  • Stock funds: 34.3 percent, down 1.9 percentage points
  • Bond funds: 12.6 percent, up 0.1 percentage points
  • Bonds: 3 percent, down 0.2 percentage points

Historical Averages:

  • Stocks/stock funds: 60 percent
  • Bonds/bond funds: 16 percent
  • Cash: 24 percent

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 Sentiment Survey has been conducted weekly since July 1987 and asks AAII members whether they think stock prices will rise, remain essentially flat, or fall over the next six months. The survey period runs from Thursday (12:01 a.m.) to Wednesday (11:59 p.m.). The survey and its results are available online here.

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