401(k) Assets in Stable Value Reach Historical High in November

December 16, 2008 (PLANSPONSOR.com) - By the end of the November, the allocation of 401(k) assets to stable value was at a historical high as 401(k) participants continued to transfer out of equities and into fixed income investments, according to Hewitt.

Likewise, November’s overall equity allocation slid to 51.9% – the lowest level since the beginning of the Hewitt 401(k) Index in 1997.

The Index for November shows stable value funds gained $342 million from participant transfers, and by the end of the month, the allocation to stable value was 33.4%, up from 20.5% just one year ago. Balanced and money market funds also received $61 million and $12 million in inflows, respectively, Hewitt said.

Outflows mainly came from large U.S. equity, lifestyle, company stock, and international funds. Large U.S. equity lost $86 million in outflows during the month. Over the past three months, a total of $528 million has moved out of this asset class, Hewitt data shows. Lifestyle funds experienced $86 million in outflows in November, with a total of $484 million shifted out of this asset class during the past three months.

Participant-only contributions also saw a shift as large U.S. equity, which usually garners the highest percentage of participant contributions, won 17.19%, behind GIC/stable value (23.13%) and lifestyle/pre-mix funds (20.42%).

On average, 401(k) participants transferred 0.06% of balances on a net daily basis in November (slightly above the trailing average of the past 12 months), according to Hewitt. The direction of transfers was fixed income-oriented on 58% of the days in the month.

The level of transfers was above normal four days of the month, with monies moving toward fixed income investments on all four days, each of which was immediately following large declines in the stock market.

The Hewitt 401(k) Index for November is here .