Hewitt: K Plan Assets Flow to Equities after Election

December 6, 2004 (PLANSPONSOR.com) - While 401(k) participants may have moved assets into fixed income in the month before the Presidential election, the day after the voting saw the largest next transfer into equities since the beginning of the year.

A Hewitt Associates news release reporting the November data for the Hewitt 401(k) Index said 0.13% of K plan assets moved into the stock market – the largest net daily transfer into equities since January 2004. Over the month, participant transfer activity was still below normal, however, according to Hewitt with an average November daily net activity of 0.05%. Historically, just under 0.07% of 401(k) balances have transferred per day on a net basis.

This follows October’s performance when K plan participants favored fixed income – but not by much (See   Hewitt: October K Plan Transfer Activity Quieter than Normal). 

The transfer activity that was recorded went toward fixed-income investment options on 29% of all trading days in November. Transfer activity favored fixed income on six trading days; it moved towards equities on 15 trading sessions. Hewitt said November net transfer activity bested the average on only four trading days.

Examining monthly transfer/cash flow data for November, Hewitt found most inflows were directed into International Equity (25.47%), Large US Equity (24.61%) followed by Small US Equity (23.08%). On the other side, leading the outflows were Company stock (-38.62%) and GIC/Stable Value (-33.77%).

In terms of November’s overall contributions, 24.53% went into Large US equity, 18.77% went to GIC/Stable Value and 17.51% went to company stock.

The full report is at  http://was4.hewitt.com/hewitt/services/401k/observ/04_november.htm .