March AAII Asset Allocation Survey: Investors Prefer Stocks and Cash to Funds

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Cash allocations increased in March, while fixed income and equity allocations both fell. Fixed income allocations fell to their lowest level in three and a half years.

Equity and equity fund allocations decreased by 0.1 percentage point to 68.4% in March. Equity exposure was last reduced in February 2021 (67.7%). Despite this, last month was the 22nd consecutive month that AAII members’ exposure to equities was above the historical average of 61.0%.

Allocations to bonds and bond funds decreased by 0.5 percentage points to 14.2%. Allocations were last lower in October 2018 (13.3%). Exposure to fixed income securities remains below its historical average of 16.0% for the 13th consecutive month.

Cash allowances increased by 0.7 percentage points to 17.4%. They were last higher in November 2020 (18.4%). February was the 23rd consecutive month that cash allocations were below their historical average of 23.0%.

Although equity allocations have retreated, they remain near the upper end of the typical historical range. The break point for typical and unusually high equity allocations is 69.0%.

February’s problems persisted throughout March, with ongoing issues in supply chains, inflation and interest rates. Additionally, problems arising from Russia’s invasion of Ukraine, such as rising oil prices and economic sanctions, continue. The main stock indices remain below their records.

Individual investor optimism about the near-term direction of the stock market has recovered from last month’s lows, but still remains below the historical average of 38.0%. Pessimism remained above its historical average for 18 consecutive weeks, before retracting below the historical average at 27.5% in the last week of the month. Neutral sentiment was the highest since January 2020 at 40.6%, above both the historical average and the upper end of the range.

March AAII Asset Allocation Results:

  • Stocks and equity funds: 68.4%, down 0.1 percentage point
  • Bonds and bond funds: 14.2%, down 0.5 percentage points
  • Cash: 17.4%, up 0.7 percentage points

March AAII Asset Allocation Details:

  • Equities: 31.4%, up 0.7 percentage points
  • Equity funds: 37.0%, down 0.8 percentage points
  • Bonds: 2.5%, up 0.4 percentage points
  • Bond funds: 11.7%, down 0.9 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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