February AAII Asset Allocation Survey: Equity Allocations Fall to a 12-Month Low

Equity allocations among individual investors fell to their lowest level in a year. Stock allocations specifically declined to a level not seen since February 2021. Meanwhile, cash allocations rose for the third consecutive month.

Stock and stock fund allocations decreased by 1.1 percentage points to 68.5% in February. Equity exposure was last lower in February 2021 (67.7%). Nonetheless, last month was the 21st consecutive month that AAII members’ exposure to equities was above the historical average of 61.0%.

Bond and bond fund allocations rose by 0.4 percentage points to 14.7%. Allocations were last higher in October 2021 at 15.1%. Even with the increase, fixed-income exposure was below its historical average of 16.0% for the 12th consecutive month.

Cash allocations increased by 0.6 percentage points to 16.7%. They were last higher in November 2020 (18.4%). February was the 22nd consecutive month that cash allocations have been below their historical average of 23.0%.

Though equity allocations pulled back, they have only declined into the upper end of the typical historical range. The breakpoint point between typical and unusually high equity allocations is 69.0%.

Stocks have not seen a fruitful 2022 so far, with multiple issues in supply chains, inflation, interest rates and now conflict in Ukraine. The major stock indexes reached their lowest levels in 2022 late in February.

Optimism among individual investors about the short-term direction of the stock market fell to its 29th lowest level in the history of the AAII Sentiment Survey in mid-February. Last week, pessimism reached its highest level in nearly nine years. Nonetheless, low yields, expectations for the Federal Reserve to raise interest rates and a long-term approach to investing by AAII members are keeping equity allocations at above-average levels.

• Stocks and Stock Funds: 68.5%, down 1.1 percentage points
• Bonds and Bond Funds: 14.7%, up 0.5 percentage points
• Cash: 16.7%, up 0.6 percentage points

• Stocks: 30.8%, down 2.0 percentage points
• Stocks Funds: 37.7%, up 0.9 percentage points
• Bonds: 2.2%, down 0.0 percentage points
• Bond Funds: 12.6%, up 0.5 percentage points

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