401(k) Participants Continue Pulling Out of Equities in April

May 15, 2007 (PLANSPONSOR.com) - 401(k) participants continued shifting their assets from equities to fixed income investments in April, but not with the same aggression as they did in March, the Hewitt 401(k) Index showed.

According to the index, participants moved $110 million from stock investments to fixed income funds in April – far lower than the $572 million they transferred the month before (See March 401(k) Transfers Directed Toward Fixed Income ). Hewitt said that transfer activity moved assets from equities to fixed income on 60% of the trading days.

Like the month before, transfer volume was average in April. On any given day of the month, 0.04% of 401(k) balances were traded on a net basis. The index also experienced above normal transfer activity on three days with money moving from equities into fixed income funds during two of the days.

Hewitt attributes the increase in fixed income investments to the large amount of money being transferred out of employer stock. Continuing the trend that started last May, company stock funds experienced very large outflows in April, with nearly $485 million transferred out, bringing the year-to-date outflows to nearly $1.4 million.

Large U.S. equity funds also experienced major outflows, losing $108 million for the month.Of all the funds, International Funds saw the greatest inflows of $347 million, lifestyle funds brought in about $120 million.

Due primarily to strong stock market movement, participants’ overall allocation to equity investments increased to 70.8% at the end of April. With strong market movement and participant cash flows, lifestyle funds and international funds achieved record high levels, comprising, on average, 8.17% and 8.81% of total assets, respectively, but company stock hit a record low, at 19.10%.

In terms of participant-only contributions,  there were little changes, with the equity allocation remaining at 69.1% of the total participant only contribution (up from 67% at year end).

For the full results of the index from April go here