December AAII Asset Allocation Survey: Investors Moved Slightly From Stock Funds to Cash

Individual investors’ exposure to cash rebounded to 15.1% for the month of December. The increase was offset by a corresponding decrease in equity exposure according to the latest AAII Asset Allocation Survey.

Stock and stock fund allocations decreased by 0.9 percentage points to 70.5%. The drop solely reflected lower stock fund holdings. December marked both the 10th consecutive month that equity allocations were at or above 70% and the 19th consecutive month that AAII members’ exposure to equities was above the historical average of 61.0%.

Bond and bond fund allocations remained constant at 14.4%. This is a six-month low. Fixed-income exposure is below its historical average of 16.0% for the 10th consecutive month.

Cash allocations rose 0.9 percentage points to 15.1%. They were last higher in February 2021 (16.3%). December was the 20th consecutive month that cash allocations have been below the historical average of 23.0%.

Equity allocations remain at an unusually high level (above 69%). Stocks faced a dip during December but rebounded at the end of the month, sending the S&P 500 index and Dow Jones industrial average to new record highs. In 2021, the indexes continued their uptrend and set several new record highs.

Optimism among individual investors about the short-term direction of the stock market was below 30% for December until the final week, when bullish sentiment grew to 37.7%. However, bullish sentiment remained below the historical average of 38.0% for the duration of the month. Bearish sentiment jumped to 42.4% early in the month, rising above its historical average of 30.5% and staying above it for the duration of the month. Additionally, neutral sentiment remained above its historical average for the entirety of December.

• Stocks and Stock Funds: 70.5%, down 0.9 percentage points
• Bonds and Bond Funds: 14.4%, down 0.0 percentage points
• Cash: 15.1%, up 0.9 percentage points

• Stocks: 33.2%, up 0.0 percentage points
• Stocks Funds: 37.3%, down 0.9 percentage points
• Bonds: 1.9%, down 0.0 percentage points
• Bond Funds: 12.5%, up 0.0 percentage points

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