A Callan press release said total Index turnover reached 1.13% for the quarter ended September 30, 2008 – well above the quarterly historical average of 0.78%. Stable value, money market, and domestic bond funds collectively captured nearly 80% of inflows. Target-date funds were the only exception to participants’ flight to fixed income with an inflow of 18.6%.
Callan said inertia among younger investors, who comprise a large share of target date fund participants, was in effect in the third quarter and a strong correlation exists between portfolio size and investor activity.
The Index, down 8.04%, outperformed the average 2030 target date fund, which lost 11.6% in the third quarter. High equity allocation in 2030 target-date-funds – 85% compared to 66.7% in the typical DC plan – proved a significant liability this quarter, the press release said.
The Index also outpaced the average corporate defined benefit plan, which returned -8.35% for the quarter.
The Callan DC Index tracks the asset flows and performance of approximately 70 participant-directed plans comprised of more than 800,000 participants and $50 billion in retirement assets.