Participant transfer activity was normal on every day but one during the month – and low on that day (February 18), with an average of just 0.07% of balances shifting on a typical day.   That’s below the trailing 12-month average (0.08%) in the Hewitt Index, though in line with volumes the past two years.

Bear Tear?

What was noteworthy was the apparent bearish tendency of those who did transfer to head toward the relative safety of fixed income investments.   Transferring money moved primarily from stock to fixed income investments on 89% of the days during the month (17 out of 19), more than any month in the Index’s history, according to Hewitt.

Most of the outflow ($225 million) came from large US equity investments, while GIC/stable value offerings continued to be the primary beneficiary, as it has been in recent months (see  January Leaves Participants Un “Effected” ).   The combination of slumping markets and equity outflows pulled the overall equity allocation in the Hewitt 401(k) Index to about 56.6% at the end of February, the Index’s all-time lowest level.

Stable Valued

Not surprisingly in view of recent trends, GIC/stable value investments continue to represent the largest allocation, 28.35% of total balances.   Company stock still comprised nearly 24% of the total, while large US equity represented 17.41%, roughly the same as the 18% it did a month ago – but well short of the 29.2% invested in the sector in December 1999.  

Other allocations were 8.92% in balanced funds, 5.97% in bond funds, 4.43% in lifestyle offerings, and 3.62% in money market options.

New money continued to favor company stock (not all new contributions to stock in the Hewitt Index are employee directed, however), which drew 34.27% of the total.   GIC/stable value was second, with nearly 19%, while large US equity pulled in nearly 17%.   Bond and balanced fund offerings drew about 6% each, while lifestyle attracted 4.5% of new contributions.   Money market, small US equity, mid US equity, and international each pulled about 3% of February contribution dollars.