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.