AAII Puts Current Investor Allocation in Historical Perspective

By on January 5, 2011

The Pragmatic Capitalism blog commented on the fact that smaller investors are shifting out of bonds. A look at the chart shown at their site indicates the shift has been small and probably meaningless statistically. More interestingly, AAII has stats on current allocations versus the historical averages.

Bond allocations fell for a third consecutive month. Individual investors held 20% of their portfolios in bonds and bond funds in December, a 1.8 percentage-point decline from November. This is the smallest allocation to fixed income since February 2010. The historical average is 15%.

Cash allocations rebounded by 1.9 percentage points to 17.8%. Despite the increase, cash allocations are merely at a three-month high. The historical average is 20%.

Though individual investors are bullish about the six-month and full-year outlook for stocks, they did not increase their portfolio allocations to equities. This may partially be due to the fact that some AAII members have already shifted their allocations, particularly from bonds to dividend-yielding stocks.

This month’s special question asked AAII members which asset class will perform best in 2011: large-cap stocks, small-cap stocks, international stocks, Treasuries, corporate bonds or precious metals. Respondents said that large-cap and small-cap stocks should deliver the highest total returns, with both asset classes receiving similar numbers of votes. International stocks were also picked by many investors. Bonds, both corporate and Treasuries, received very few votes.”

Source: Pragmatic Capitalism

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