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Cash allocations grew in March while fixed-income and equity allocations both fell. Fixed-income allocations dropped to their lowest level in three and a half years.
Stock and stock fund allocations decreased by 0.1 percentage points to 68.4% in March. Equity exposure was last lower 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%.
Bond and bond fund allocations fell by 0.5 percentage points to 14.2%. Allocations were last lower in October 2018 (13.3%). Fixed-income exposure remains below its historical average of 16.0% for the 13th consecutive month.
Cash allocations 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 have been below their historical average of 23.0%.
Though equity allocations pulled back, they remain near the upper end of the typical historical range. The breakpoint of typical and unusually high equity allocations is 69.0%.
Issues from February persisted throughout March, with continued issues in supply chains, inflation and interest rates. Plus, issues stemming from Russia’s invasion of Ukraine, such as higher oil prices and economic sanctions, are ongoing. The major stock indexes remain below their record highs.
Optimism among individual investors about the short-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 to 27.5% in the final week of the month. Neutral sentiment was the highest it has been since January 2020 at 40.6%, above both the historical average and upper end of the range.
March AAII Asset Allocation results:
- Stocks and Stock Funds: 68.4%, down 0.1 percentage points
- Bonds and Bond Funds: 14.2%, down 0.5 percentage points
- Cash: 17.4%, up 0.7 percentage points
March AAII Asset Allocation details:
- Stocks: 31.4%, up 0.7 percentage points
- Stocks 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, stock 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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