September AAII Asset Allocation Survey: Equity Exposure Modestly Declines

Despite downside volatility and unusually low levels of optimism, the September AAII Asset Allocation Survey only shows a modest decrease in individual investors’ allocation to equities.

Stock and stock fund allocations declined by 1.1 percentage points to 63.4%. Though at a two-year low, equity exposure remains above the historical average of 61.5% for the 28th consecutive month. Allocations to stocks and stock funds were last lower in November 2020 (63.2%).

Bond and bond fund allocations increased by 0.3 percentage points to 14.7%. This is the fourth time in five months that fixed-income allocations have increased. Nonetheless, bond and bond fund allocations are below their historical average of 16.0% for the 19th consecutive month.

Cash allocations rebounded by 0.7 percentage points to 21.9%. September was the 29th consecutive month that cash allocations have been below their historical average of 22.5%.

There were three weeks during September with bullish sentiment readings ranking among the 50 lowest in our Sentiment Survey’s history. At the same time, bond yields continued to rise-albeit with some increased volatility near September’s end. Yet, AAII members largely stuck to their allocations. This is because they follow a long-term approach to investing, as we encourage them to do so.

September AAII Asset Allocation Survey results:

• Stocks and Stock Funds: 63.4%, down 1.1 percentage points
• Bonds and Bond Funds: 14.7%, up 0.3 percentage points
• Cash: 21.9%, up 0.7 percentage points

September AAII Asset Allocation Survey details:

• Stocks: 29.9%, down 0.5 percentage points
• Stock Funds: 33.5%, down 0.6 percentage points
• Bonds: 3.4%, up 0.4 percentage points
• Bond Funds: 11.4%, unchanged

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.