Hewitt Finds 'Very Quiet' June for 401(k) Trading

July 16, 2007 (PLANSPONSOR.com) - You would have had to look closely to track 401(k) trading activity in June with participants generally turning in "a very quiet month," according to the latest Hewitt 401(k) Index data.

Hewitt said 401(k) trading was at historic lows over the month with only 0.02% of balances moved on a net basis and no June days having above normal activity.

June was the second month with unenthusiastic activity with participants only transferring 0.03% of balances the month before (See  401(k) Participants Restrained with Asset Movement in May )


Due to the downturn in the stock market in June, 401(k) participants’ equity allocation decreased slightly to 68.9%, from 69.2% in May.

Among the participants who did move money during June, Hewitt said, transfer activity favored equities with 57% of the days showing transfers from fixed income to stocks. About three-quarters of the total dollars moved during June flowed into diversified stock holdings – $192 million worth, according to Hewitt.

June equity allocations went mostly to middle U.S. equity ($53 million), international equity ($49 million) and small U.S. equity ($48 million), according to Hewitt. The other one quarter moved primarily to GIC/stable value.

As it did in May, outflow primarily came from company stock funds; a total of $170 million (65.6%) was transferred out of these funds in June. In fact, company stock funds were the biggest loser in five out of six months this year, losing about $2 billion in assets, according to Index data. Other June outflows included 16.8% from fixed income and 5% from balanced funds.

In terms of June’s overall allocations, 19.9% was in Large U.S. Equity, 17.5% in Company Stock, 14.6% in Lifestyle/Pre-Mix funds and 14.5% in GIC/Stable Value.

Since January 1, Hewitt said neither equity investments nor fixed income investments seemed to dominate participant transfers. The asset class that received the largest transfers was international equity, which captured more than $733 million, which was also the asset class with the best performance during the first half.

The next major transfers were to GIC/stable value and bond — each received $377 million and $365 million respectively. Middle U.S. equity also gained $319 million from participant transfers.Participants moved monies toward fixed income investments on a little more than half of the days (56%) since the beginning of the year.

A normal level of relative transfer activity is when the net daily movement of participants’ balances as a percent of total 401(k) balances within the Hewitt 401(k) Index equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.

More information is  here .