May 8, 2013 (PLANSPONSOR.com) - Defined contribution plan participants’ daily transfer volumes continue to decline since January—to 0.024% of balances per day in April, according to the Aon Hewitt 401(k) Index.
Total net transfer activity was low, totaling $200 million or 0.14% of total participant balances. This amount is less than the March total of $345 million and significantly less than both January and February ($930 million and $431 million, respectively).
Participants who transferred had a preference for fixed-income investments during April. The net aggregate shows 59% of transfers were to fixed income, up from 35% in March. Transfers into diversified equities (equity excluding company stock) asset classes totaled a negligible $26 million of total flows or 0.02% of total assets. However, when company stock is included, the transfers total nets $52 million (0.04%) away from equities.
Total net outflows in April were concentrated among several asset classes: company stock funds, losing $78 million (39%); small U.S. equities, losing $46 million (23%); and bond funds, which lost $36 million (18%). Additionally, emerging market funds lost $32 million (16%) from negative flows.
April’s inflows went largely to premixed funds which gained $83 million (41%). Both money market funds and specialty/sector funds received approximately $33 million (17%) each. Mid U.S. equities also received $18 million (9%) of the flows.
Employee discretionary contributions, another measure of participant sentiment, shows participants continued to increase their equity allocations—64.3% of new employee contributions went into equities during April. This is the highest rate reported by the Aon Hewitt 401(k) Index since before the market collapse in 2008. By the end of April, participants’ overall equity allocation increased to 61.9%, from 61.8% at the end of March. More information is here.