July AAII Asset Allocation Survey: Equity Allocation Falls as Cash Allocation Increases

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Equity allocations fell to their lowest level in nearly two years in July, according to the latest AAII asset allocation survey. Cash allocations, meanwhile, continued to rise to their highest level in more than two years.

Inventory and Inventory fund allocations decreased by 0.6 percentage points to 64.0%. This is the lowest equity exposure since November 2020 (63.2%). However, the decline was not small enough to prevent equity allocations from remaining above their historical average of 61.5% for the 26th consecutive month.

Allocations to bonds and bond funds fell 0.4 percentage points to 13.7%. Bond and bond fund allocations are below their historical average of 16.0% for the 17th consecutive month.

Cash allowances increased by 1.1 percentage points to 22.3%. Cash exposure was last higher in April 2020 (23.0%). Even with this increase, July was the 27th consecutive month that cash allowances were below their historical average of 22.5%.

Although individual investor optimism about the near-term direction of the stock market in our weekly sentiment survey increased for most of July, it remained well below its historical average. At the same time, pessimism largely remained at unusually high levels.

July AAII Asset Allocation Survey Results:

  • Stocks and equity funds: 64.0%, down 0.6 percentage points
  • Bonds and bond funds: 13.7%, down 0.4 percentage points
  • Cash: 22.3%, up 1.1 percentage points

July AAII Asset Allocation Survey Details:

  • Equities: 31.1%, up 0.4 percentage points
  • Equity funds: 32.9%, down 1.1 percentage points
  • Bonds: 3.4%, unchanged
  • Bond funds: 10.4%, down 0.4 percentage points

Historical averages:

  • Stocks/stock funds: 61.5%
  • Bonds/Bond Funds: 16.0%
  • Cash: 22.5%

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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