401(k) Participants Turn Cautious in November

December 14, 2007 (PLANSPONSOR.com) - The weakness of the stock market led 401(k) participants to seek more cautious investments, according to the results of the Hewitt 401(k) Index for November.

While overall transfer activity was modest in November, four days of the month experienced above-normal levels of transfers, each of which was fixed-income oriented, Hewitt said. Participants moved assets out of equities and into fixed-income investments on 76% of the days of the month.

All equity asset classes except International experienced net outflows, with $553 million shifting out of equities and into fixed-income investments during the month, Hewitt data showed. In contrast, the three fixed-income asset classes (Money Market, Stable Value, and Bond) received over $600 million of inflows.

Nearly 60% of transferring 401(k) money moved into GIC/stable value during November, and Bond funds received $178 million in transfers in the month. Large U.S. Equity was the biggest loser of the month, as participants moved a total of $231 million out of this asset class.

Small U.S. Equity saw $158 million transferring out for the month.

At the end of November, participants’ overall allocation to equity investments was 67.1%, down from 68.1% at the end of October. Large U.S. Equity held 20.59% of 401(k) balances at the end of November, GIC/Stable Value held 20.46%, and Company Stock held 16.86%.

The majority of participant-only contributions went into Large U.S. Equity funds (21.03%), Lifestyle/Pre-mix funds (17.8%), and GIC/Stable Value funds (15.54%). Large U.S. Equity, Lifestyle/Pre-mix, and Company Stock funds received the majority of overall contributions in November: 19.25%, 16.38%, and 15.72%, respectively.

The Hewitt 401(k) Index is here .