April AAII Asset Allocation Survey: Fixed Income Allocations Fall to 14-Year Low

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Individual investor cash allocations rose for the fifth consecutive month according to the April AAII asset allocation survey. At the same time, fixed income allocations fell to their lowest level in 14 years.

Equity and equity fund allocations increased by 1.4 percentage points to 69.8% in April. Equity exposure was last higher in December 2021 (70.5%). Last month was the 23rd month in a row that AAII members’ exposure to equities was above the historical average of 61.0%.

Bond and bond fund allocations decreased by 1.6 percentage points to 12.6%. The last allocations reached this level in June 2008. Exposure to fixed income securities remains below its historical average of 16.0% for the 14th consecutive month.

Cash allowances increased by 0.2 percentage points to 17.6%. They were last higher in November 2020 (18.4%). April is the 24th consecutive month that cash allocations are below their historical average of 23.0%.

Equity allocations returned to an unusually high level for the 12th time in the past 14 months. Conversely, fixed income allocations fell to the lower end of their typical historical range. The typical and unusually low allocation threshold for fixed income securities is 12.2%.

In our weekly AAII sentiment survey, optimism was below 20% in April, indicating that individual investors are changing their allocations much less frequently than their short-term expectations. Since 1987, there have only been 35 weeks when bullish sentiment was below 20%.

Although many individual investors expect the stock market to fall or remain relatively unchanged over the next six months, the combination of inflation, monetary policy tightening and still historically low yields keep a little light attractive on bonds. Additionally, many AAII members follow a long-term investment approach.

April AAII Asset Allocation Results:

  • Stocks and equity funds: 69.8%, up 1.4 percentage points
  • Bonds and bond funds: 12.6%, down 1.6 percentage points
  • Cash: 17.6%, up 0.2 percentage points

April AAII Asset Allocation Details:

  • Equities: 33.3%, up 1.8 percentage points
  • Equity funds: 36.6%, down 0.4 percentage points
  • Bonds: 2.8%, up 0.3 percentage points
  • Bond funds: 9.8%, down 1.9 percentage points

Historical averages:

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

The AAII’s Asset Allocation Survey has been conducted monthly since November 1987 and asks AAII members what percentage of their portfolios are allocated to stocks, equity 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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