December AAII Asset Allocation Survey: Cash Allocations Fall

Cash as a percentage of individual investors’ portfolios continued to pull back from a 2.5-year high. The December AAII Asset Allocation Survey also shows equity allocations rising and fixed-income allocations rebounding.

Stock and stock fund allocations increased by 1.5 percentage points to 63.9%. Despite two consecutive monthly increases, it was still the fourth-lowest reading since December 2020 (67.6%). Equity exposure remains above the historical average of 61.5% for the 31st consecutive month.

Bond and bond fund allocations grew slightly, increasing by 0.7 percentage points to 14.3%. Bond and bond fund allocations are below their historical average of 16.0% for the 22nd consecutive month.

Cash allocations fell by 2.2 percentage points to 21.8%. Even with the decline, this reading is the fourth highest in the last 32 months. However, cash allocations have fallen below their historical average of 22.5%.

Optimism about the short-term direction of the stock market continued to be unusually low throughout December. Concerns remain about the overall direction of the economy, inflation and potential interest rate hikes.

December AAII Asset Allocation Survey results:

• Stocks and Stock Funds: 63.9%, up 1.5 percentage points
• Bonds and Bond Funds: 14.3%, up 0.7 percentage points
• Cash: 21.8%, down 2.2 percentage points

December AAII Asset Allocation Survey details:

• Stocks: 31.8%, up 1.4 percentage points
• Stock Funds: 32.2%, up 0.2 percentage points
• Bonds: 4.3%, up 0.5 percentage points
• Bond Funds: 10.0%, up 0.1 percentage points

Historical averages:

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

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, stock funds, bonds, bond funds and cash.