2001 Participant Activity Light Despite Market Tumult

January 11, 2001 (PLANSPONSOR.com) - Despite one of the most volatile markets in history, for the most part, 401(k) participants stood pat, according to the Hewitt 401(k) Index.

In fact, the number of above-average transfer activity days in 2001 was about 1/3 less than the year before, according to Hewitt.

And on those days when transfers did occur, it was likely to move toward fixed income, at least on a net basis. The percent of days in which the majority of transfers were to bond, money market, or GIC/stable value investments was greater in 2001 than in any year since 1998 (57.1%).  Not surprisingly, the percent of days in which transfers were primarily toward fixed income peaked in September at 80%.

Stock Shock

In the wake of sharply declining markets, the lack of participant activity resulted in a decline in the overall participant allocation to stock investments, dropping from 73% of total plan balances at the beginning of the year to 67% by year end.  Company stock continued to represent nearly 28% of the total assets monitored by the index.  Large US equities continued to have nearly 23% of the total, while GIC/Stable Value comprised slightly more than 21%

In December, participants continued to favor fixed income investments – on 55% of the trading days during the month.  Still, transfer activity was quite modest during the month, with just two days of above-average net transfer activity.  Interestingly enough, one of those was December 31 – when trading activity was more than 2.5 times the normal daily trading volume, though funds continued to move toward fixed income on a net basis.

Company stock continued to enjoy an 18.87% share of the total December contributions.  However, that was less than the near 21% that went toward GIC/Stable Value and 27.44% deposited in large US equity investments.