401(k) Participants Go to International. Then Stable Funds in March

April 7, 2005 (PLANSPONSOR.com) - 401(k) participants first poured assets into international and emerging market funds in March, but then switched to GIC/stable value funds as oil prices soared and the dollar continued to show weakness.

On average, only 0.04% of balances per day transferred on a net basis in the third month of the year, but when they did, they first went into international funds, and then into more stable ones. This was the lowest net transfer activity seen in any March since the inception of the Hewitt 401(k) Index, which measures such movement. However, it was the same figure seen in the month of  February .

In the first two weeks of the month, $140 million on a net basis flowed into international and emerging market funds (about 2.6% of such funds’ average balances, according to Hewitt), but the trend shifted about midway through the month, when jittery 401(k) investors moved into more stable funds. One common trend permeated the month though: an aversion to US equity funds. Such funds lost $255 million on a net basis in March.

In terms of contribution allocation, 66.9% of 401(k) discretionary contributions went towards stocks on the month. Overall, the proportion of total assets in stock investments stood at 66.4%, up from its low of 57% in 2003.