May AAII Asset Allocation Survey: Bond Fund Allocations Fall to 30-Month Low

Individual investors’ exposure to equities remained above 70% for the third consecutive month according to the latest AAII Asset Allocation Survey. Fixed-income allocations, however, declined to its lowest level since October 2018.

Stock and stock fund allocations increased by 0.2 percentage points to 70.5%, marking the 12th consecutive month that equity allocations are above the historical average of 61.0%. Equity allocations were last higher in January 2018 (71.2%).

Bond and bond fund allocations pulled back by 0.7 percentage points to 14.4%, staying below their historical average of 16.0% for the third consecutive month. Fixed-income allocations were last lower in October 2018 (13.3%).

Cash allocations increased by 0.5 percentage points to 15.1%. May was the 13th consecutive month cash allocations have been below their historical average of 23.0%.

Equity allocations continue to stay at an unusually high level. Optimism about the short-term direction of the stock market diminished last month but pessimism also was also below average in the weekly AAII Sentiment Survey.

Fixed-income allocations are still within their typical historical range. Concerns about inflation and rising equity prices are likely both playing a role in reducing exposure to bonds and bond funds.

• Stocks and Stock Funds: 70.5%, up 0.2 percentage points
• Bonds and Bond Funds: 14.4%, down 0.7 percentage points
• Cash: 15.1%, up 0.5 percentage points

• Stocks: 31.3%, down 0.1 percentage points
• Stocks Funds: 39.1%, up 0.3 percentage points
• Bonds: 2.2%, down 0.2 percentage points
• Bond Funds: 12.2%, down 0.4 percentage points

• Stocks/Stock Funds: 61.0%
• Bonds/Bond Funds: 16.0%
• Cash: 23.0%