April AAII Asset Allocation Survey: Fixed-Income Allocations Fall to a 14-Year Low

Individual investors’ cash allocations grew for the fifth consecutive month according to the April AAII Asset Allocation Survey. At the same time, fixed-income allocations fell to a 14-year low.

Stock and stock fund allocations increased by 1.4 percentage points to 69.8% in April. Equity exposure was last higher in December 2021 (70.5%). Last month was the 23rd consecutive month that AAII members’ exposure to equities was above the historical average of 61.0%.

Bond and bond fund allocations fell by 1.6 percentage points to 12.6%. Allocations were last at this level in June 2008. Fixed-income exposure remains below its historical average of 16.0% for the 14th consecutive month.

Cash allocations increased by 0.2 percentage points to 17.6%. They were last higher in November 2020 (18.4%). April was the 24th consecutive month that cash allocations have been below their historical average of 23.0%.

Equity allocations were back at an unusually high level for the 12th time in the past 14 months. Fixed-income allocations, conversely, fell to the lower end of their typical historical range. The breakpoint of typical and unusually low fixed-income allocations is 12.2%.

In our weekly AAII Sentiment Survey, optimism was below 20% twice in April, indicating that individual investors change their allocations much less frequently than their short-term expectations. Since 1987, there have only been 35 weeks when bullish sentiment was below 20%.

Though many individual investors expect the stock market to either fall or stay relatively unchanged over the next six months, the combination of inflation, tightening monetary policy and still historically low yields are keeping an unattractive light on bonds. In addition, many AAII members follow a long-term approach to investing.

• Stocks and Stock Funds: 69.8%, up 1.4 percentage points
• Bonds and Bond Funds: 12.6%, down 1.6 percentage points
• Cash: 17.6%, up 0.2 percentage points

• Stocks: 33.3%, up 1.8 percentage points
• Stocks Funds: 36.6%, down 0.4 percentage points
• Bonds: 2.8%, up 0.3 percentage points
• Bond Funds: 9.8%, down 1.9 percentage points

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