Two out of Five Investors Allocate More Conservatively Based on Economic Data

This month’s Asset Allocation Survey special question asked AAII members how the prevailing economic data has affected their asset allocation decisions. Two out five respondents (40%) state that they have followed a more conservative allocation strategy as a result of the recent economic data. A majority within this group also state that they are allocating more to cash and bond holdings. This compares to 26% of respondents who say their allocation strategy has not changed as a result of any data. Many within this group state that they follow a long-term investing strategy and prefer not to be swayed by market fluctuations.

Other responses include those who state that they are rebalancing their holdings more often and looking for bargain investment opportunities (21%) and those who say that economic data has led them to allocate a greater amount to dividend-focused stocks (14%).

Here is a sampling of the responses: 

• “I cashed out some winners to prepare for a protracted downturn and to take advantage of investment opportunities during the downturn.”
• “I have been making some purchases to take advantage of bargains, but going forward, I’m playing defense and will shift my allocation back to a more conservative mix.”
• “I moved a higher-than-usual percentage to cash and bonds; especially without performance of bonds for last couple of years, it has paid off.”
• “The prevailing economic data is not affecting my asset allocation decisions. Opportunistic purchasing of discounted stocks is my current strategy.”
• “We are looking for good value equities with a long-term investing horizon. In particular, consistent dividend payers selling at a reasonable valuation.”