July AAII Asset Allocation Survey: Equity Allocation Falls As Cash Allocation Rises

Equity allocations fell to their lowest level in almost 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.

Stock and stock fund allocations decreased by 0.6 percentage points to 64.0%. This was the smallest exposure to equities since November 2020 (63.2%). However, the decrease was not small enough to keep equity allocations from staying above their historical average of 61.5% for the 26th consecutive month.

Bond and bond fund allocations decreased by 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 allocations grew by 1.1 percentage points to 22.3%. Cash exposure was last higher in April 2020 (23.0%). Even with the increase, July was the 27th consecutive month that cash allocations have been below their historical average of 22.5%.

Although optimism among individual investors about the short-term direction of the stock market in our weekly Sentiment Survey rose throughout most of July, it continued to remain well below its historical average. At the same time, pessimism largely stayed at unusually high levels.

July AAII Asset Allocation Survey results:

• Stocks and Stock 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:

• Stocks: 31.1%, up 0.4 percentage points
• Stock 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 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. The survey and its results are available online at: https://www.aaii.com/investor-surveys.