On average over the month, daily net transfer activity was 0.05% of balances, below the historical average of 0.07%, and substantially lower than the 0.09% average net transfer activity recorded in August last year.
There were only two days of above-normal transfer activity during the month. In fact, 2001 has seen only 21 above-normal transfer activity days. This compares to 48 above-normal transfer activity days over the same period last year.
Stocks to Bonds
On the 59% of the days this year in which transfer activity has occurred, the direction of transfers has primarily been away from equities and towards fixed income.
This is in line with changes in the equity market and a reversal of that seen in 2000, when transferring money chiefly moved into equities.
Over the month, 65% of the trading days saw fixed income attract more transferring money than equities, with 85% of money transferred heading for the GIC/Stable Value and Bond funds.
While overall transfers have been modest, so far 2001 has seen 57% of transferring monies going into GIC/Stable Value, while a comparable amount has come directly out of large US equities.
Contributing to Fixed Income
A similar shift has occurred in terms of contributions. In August last year, 77.5% of contributions went into equities, compared with August this year, which saw 73.9% of contributions destined for equities.
In terms of overall asset allocation, 401(k) plan participants have allowed their exposure to equities to decline from 74.4% in August last year to 68.5%, the lowest stock exposure level since the index’s inception.
Much of this is being attributed to the failure of participants to rebalance during the equity market decline.