More equities? Yes, please.


Chart of the Week – More equities? Yes, please.

Investors are flocking to equities more than at any time except the dot-com boom. What might that tell us?

The average investor allocation to equities is approximately 48% versus a historical median of 36%. If the past serves as precedent, annual returns over the next 10 years could be much lower than investors have enjoyed over the past decade, as investors draw-down equity exposure. Using actively managed strategies, focused on company-specific risks, may make sense in this type of environment.

Average Equity Allocations vs. Forward 10-yr S&P 500 Index Returns

Source: Philosophical Economics, Federal Reserve, Bloomberg, Ivy Investments. Dates shown are January 1, 1952 through December 31, 2020. This chart is being provided as a general source of information for education purposes only, and is not intended as a recommendation to purchase, sell or hold any specific security or to engage in any investment strategy. The S&P 500 Index is a float-adjusted market capitalization weighted index that measures the large-cap U.S. equity market. The index includes 500 of the top companies in leading industries of the U.S. economy. It is not possible to invest directly in an index.