401(k) Participants Restrained with Asset Movement in May

June 19, 2007 (PLANSPONSOR.com) - 401(k) participants traded very modestly in May, with daily average net transfer activity at only 0.03% of balances and no days of above-normal transfer activity, according to the results of the Hewitt 401(k) Index.

Participants were split between equity and fixed income investments, Hewitt said. GIC/stable value experienced the largest inflows in May of more than $196 million; however, two popular equity asset classes also received relatively large inflows during the month.

International equity funds received $108 million in net transfers, bringing its year-to-date inflows to nearly $684 million, while lifestyle funds received net transfers of nearly $94 million in May.

During the month, a total of $327 million was transferred out of equities toward fixed income investments, largely caused by the large outflows out of company stock funds. Participants shifted funds from equities into fixed income investments on 86% of the days in May, according to Hewitt data. Nearly $471 million was shifted out of company stock funds on a net basis in May. Since the beginning of the year, nearly $1.8 billion was transferred out of this asset class.

On the other hand, about $144 million was transferred out of fixed income investments toward diversified equities during the month.

At the end of May, Large US Equity investments held 21.6% of participant assets, while GIC/Stable Value investments held 19.09%. International equities held 8.95% of participant balances, and Lifestyle/Pre-Mix funds held 8.23%. Participants’ equity allocation was 69.2% at the end of May, a slight increase from 68.8% at the end of April.

The Large US Equity asset class won the biggest percent of participant new contribution dollars for the month at 22.28%. Lifestyle/Pre-Mix funds followed at 16.88%. The Large US Equity (20.27%) and Lifestyle/Pre-Mix (15.2%) asset classes won the biggest percentages of overall contribution dollars.

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