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Chart Of The Day - US Equity Allocations

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Chart Of The Day

Chart Of The Day - US Equity Allocations

Portfolio allocations to equities remain elevated...

Callum Thomas
Sep 13, 2023
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Chart Of The Day - US Equity Allocations

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Asset Allocation: Now that we have the Q2 update to the Fed “Flow of Funds” dataset (an aggregated account of the stock and flow of funds across the economy), we can take an updated look at investor allocations to equities.

  • First, technical note: the black line is surveyed portfolio allocations (from the AAII), the blue line is “implied allocations” (i.e. total equity mutual fund + ETF assets vs all assets in mutual funds + ETFs (from the ICI)), and the red line is aggregate US household holdings of equities vs financial assets (from the Fed).

  • One interesting point is the difference between them — the AAII survey (presumably more active + wealthier investors) shows generally higher allocations to equities vs the Fed FoF account of *all households* …which no doubt includes less active and lower income/net-worth investors. Also, as a side note, the blue line is arguably understated (by about 2-3ppts) more recently due to the regional bank run/rebalance out of deposits and into money market mutual funds.

  • But zooming out from the detail, we can see -across all metrics- investor allocations to equities are clearly elevated, and regardless of what people say or what you hear in the news, overall people are fairly bullish on equities. In particular, the Fed FoF aggregate picture shows household allocations to equities only 1ppt off the all-time-high, and *higher* than dot-com or pre-financial-crisis.


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Chart Of The Day - US Equity Allocations

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Beachman
Writes Beachman’s Newsletter
Sep 13Liked by Callum Thomas

401k and IRA effects in action. More investors own NVDA and AAPL today without knowing that they do. Cheers!

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