DC Participants Transfer Less in February

March 14, 2013 (PLANSPONSOR.com) - After rising sharply in January, defined contribution (DC) plan participants’ daily transfer volumes resumed levels closer to normal in February.

According to the Aon Hewitt 401(k) Index, net transfer activity was moderate, totaling $431 million or 0.31% of total participant balances. This amount is far less than January’s total of $930 million (see “DC Participants Embrace Equity in January”).  

Net daily transfers favored fixed income funds for 63% of trading days in February, which is similar to the trend of 2012. Transfers into diversified equities (equity excluding company stock) asset classes totaled $104 million of total flows or 0.06% of total assets.  

Total net outflows during the month were heavily concentrated among two asset classes: company stock funds, losing $193 million (45%), and bond funds, which lost $171 million (40%) due to flows. Additionally, large U.S. equities funds lost $45 million (10%) and emerging market funds lost $22 million (5%).

February ended with net inflows for most asset classes. The largest inflows went to GIC/stable value funds, which gained $151 million (35%). Premixed funds received $75 million (17%) and international funds took in $70 million (16%) of monthly inflows, while money markets gained $68 million (16%).  

Employee discretionary contributions, another measure of participant sentiment, increased their equity allocations from the January average of 62.2% to 63.4% of new contributions were invested in equities during February.  

By the end of February, participants’ overall equity allocation remained flat at 61.1%, up slightly from 61.0% at the end of January.