Investing July 10, 2006

401(k) Participants Flock to Fixed Income in June

July 10, 2006 (PLANSPONSOR.com) - Participants in 401(k) plans focused much of their transfer activity toward fixed income funds in June, according to Hewitt's 401(k) Index.
Reported by

Net transfer activity was fixed-income oriented on 86% of the days during the month – the largest percentage of days in a month since 2003, according to Hewitt.

As the stock market continued its descent in the month, average daily net transfer activity increased to 0.054% of balances (through June 15). Net transfer activity peaked at 0.13% of balances on June 13, Hewitt data showed.

Participants continued their retreat started in May from international and emerging market equity funds (See Participants End Love Affair with International Funds ). International and emerging market equity funds experienced net outflows of more than a quarter of a billion dollars, or 3.2% of balances, over the month.

Around 21% of transferred balances went into money market funds and almost 76% went into GIC/Stable Value funds in June.

Almost 22% of 401(k) balances were held in GIC/Stable Value funds as of the end of June, while 22.22% were in company stock and 20.68% were in Large US Equity funds.

Large US Equity funds pulled in more new participant contributions than other fund types (23.19%) followed by GIC/Stable Value which pulled in 17.45% of new participant contributions.

The Hewitt data can be viewed here .

«