401(k) Participants Flocked to Equities in April

May 12, 2010 (PLANSPONSOR.com) - 401(k) participant transfers were strongly equity-oriented in April, according to the results of the Hewitt 401(k) Index.

A total of $288 million moved from fixed income investments into equities during the month. Excluding company stock fund flows, diversified equities gained transfers of $498 million, Hewitt data showed. In addition, nearly three-quarters (71%) of the days were equity-oriented in April.  

Both large and small U.S. equity funds received large inflows, and together accounted for two-thirds of total transfers. Large U.S. equities gained $227 million and small U.S. equities received $211 million. Lifestyle/premixed funds also received $110 million in transfers during the month.  

All three fixed income asset classes experienced outflows in April – mainly from GIC/stable value funds, which lost a total of $294 million. In addition, company stock funds had outflows of $210 million. As the MSCI EAFE Index declined (while domestic markets were up), international funds had net transfers out of $86 million.   

Participants’ overall equity holdings rose by 0.6% in April to 59.5%, due to stock market return and participant transfer activity. GIC/stable value funds held 24.63% of 401(k) assets at the end of the month, while Large U.S. Equity and Lifestyle/premixed held 17.86% and 11.86% of assets, respectively.

Company stock funds accounted for 14.2% of assets at the end of April.  

Employee-only equity contribution was also up – from 60.2% to 60.9% at the end of April. Lifestyle/premixed funds took in 24.19% of participant contributions during the month. Large U.S. equity took in 17.27% and GIC/stable value funds received 18.71% of participant contributions.  

Lifestyle/premixed, GIC/stable value, and Large U.S. equity funds were also the biggest receivers of overall contributions to 401(k) plans in April at 23.74%, 17.29%, and 15.96%, respectively. Company stock funds received 13.19% of overall plan contributions during the month.  

The Hewitt 401(k) Index Observations for April is here.