January AAII Asset Allocation Survey

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Cash allocations among individual investors hit their highest level since February 2021 according to the January allocations survey. The latest survey also shows lower exposure to fixed income and equities.

Equity and equity fund allocations decreased 0.9 percentage points to 69.6%. Equity exposure was last reduced in February 2021 (67.7%). January marked the 20th consecutive month that AAII members’ exposure to equities was above the historical average of 61.0%.

Allocations to bonds and bond funds decreased by 0.1 percentage point to 14.3%. Fixed income exposure was last reduced in October 2018 (13.3%). This drop keeps exposure to fixed income securities below its historical average of 16.0% for the 11th consecutive month.

Cash allowances increased by 1.0 percentage point to 16.1%. Cash allocations were last higher in February 2021 (16.3%). Nonetheless, last month was the 21st month in a row that cash allocations were below their historical average of 23.0%.

Equity allocations remain at an unusually high level (above 69%). The major indexes all fell below their 200-day moving averages in January, with the decline beginning on January 4, 2022. The Federal Reserve announced an upcoming interest rate hike in March in an attempt to curb runaway inflation , which is now above 7%. %.

At the same time, individual investors’ optimism about the near-term direction of the stock market fell to its lowest level of 21.0% since July 2020 (20.2%) during the penultimate January week. Pessimism in our weekly AAII sentiment survey jumped to 46.7% at the end of the month and was also higher in July 2020 (46.8%).

January AAII Asset Allocation Results:

  • Stocks and equity funds: 69.6%, down 0.9 percentage points
  • Bonds and bond funds: 14.3%, down 0.1 percentage point
  • Cash: 16.1%, up 1.0 percentage point

January AAII Asset Allocation Details:

  • Equities: 32.8%, down 0.4 percentage points
  • Equity funds: 36.8%, down 0.5 percentage points
  • Bonds: 2.2%, up 0.3 percentage points
  • Bond funds: 12.1%, down 0.3 percentage points

Historical averages:

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

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, 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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