Hewitt: February K Plan Trading Went Out with a Bang

March 11, 2005 (PLANSPONSOR.com) - While 401(k) investors wrapped up their activities in February with a flurry of last-minute asset transfers, overall it was a relatively quiet month, according to the latest Hewitt 401(k) Index.

Hewitt said that average daily activity in February was 0.04% of assets, the same as the month before (See  401(k) Transfers Below Average in January ), and well below the average of 0.065% that has been seen since the inception of the Hewitt 401(k) Index, according to a  news release from the company. Only three days had above average transfer activity.

The comparatively modest activity is indicative of the past year, in which transfer activity has mostly been below average as investors remain skittish about the state of the economy, the company said in its announcement.

According to Hewitt, participants chased performance from international and emerging market stock funds with more than $125 million flowing into international equities over the month. In fact, equities seemed to be on the mind of many participants with more money moving from fixed income to equities 58% of the February trading days.

Since September 2004, more than $500 million has poured into international stock funds, a stark contrast to large US equity funds that have suffered outflows in four of the past six months. The domestic equities offerings suffered more than $170 million in outflows year to date.

During the month, money going to international and emerging markets offerings primarily came from company stock (39.65%), GIC/Stable Value (24.48%) and large US equity funds (21.29%). Regarding allocation of participants’ discretionary contributions, 25.61% went to large US equity funds, 18.12% to GIC/Stable Value and 10.25% to company stock.

Finally, February’s asset allocation stood at 23.37% to company stock, 22.23% to large US equity, 21.80% to GIC/Stable Value and 7.52% to balanced funds.