October AAII Asset Allocation Survey: Cash Allocations Jump to 2.5-Year High

Cash as a percentage of individual investors’ portfolios rose to its highest level in over two and a half years last month. The October AAII Asset Allocation Survey also shows equity and fixed-income allocations falling.

Stock and stock fund allocations declined by 1.8 percentage points to 61.6%. Allocations to stocks and stock funds were last lower in May 2020 (60.8%). Even with the decrease, equity exposure remains above the historical average of 61.5% for the 29th consecutive month.

Bond and bond fund allocations pulled back by 1.0 percentage points to 13.7%. Bond and bond fund allocations are below their historical average of 16.0% for the 20th consecutive month.

Cash allocations jumped by 2.8 percentage points to 24.7%. Cash allocations were last higher in March 2020 (26.1%). This is also the first time in 30 months that cash allocations are above their historical average of 22.5%.

Optimism about the short-term direction of the stock market continued to be unusually low throughout October. At the same, the prospect of further aggressive rate hikes by the Federal Reserve loomed over the bond market.

• Stocks and Stock Funds: 61.6%, down 1.8 percentage points
• Bonds and Bond Funds: 13.7%, down 1.1 percentage points
• Cash: 24.7%, up 2.8 percentage points

• Stocks: 30.1%, up 0.2 percentage points
• Stocks Funds: 31.6%, down 1.9 percentage points
• Bonds: 3.6%, up 0.2 percentage points
• Bond Funds: 10.1%, down 1.3 percentage points

• Stocks/Stock Funds: 61.5%
• Bonds/Bond Funds: 16.0%
• Cash: 22.5%