Investing November 11, 2004

Hewitt: October K Plan Transfer Activity Quieter Than Normal

November 11, 2004 (PLANSPONSOR.com) - In the 30 days before the Presidential election, 401(k) plan participants moved assets from stocks to fixed income, but didn't exactly do it in a flood.
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October’s transfer activity among 401(k) participants, as measured by the Hewitt 401(k) Index, was still below normal, Hewitt said in a news release. Historically, just under 0.07% of 401(k) balances have transferred per day on a net basis; in October participants transferred just 0.04% of their balances.

The transfer activity that was recorded went toward fixed-income investment options on 62% of all trading days in October. Transfer activity favored fixed income on 13 trading days; it moved towards equities on eight trading sessions. Hewitt said net transfer activity bested the average on only two trading days.

Examining monthly transfer/cash flow data for October, Hewitt found most inflows were directed into GIC/Stable Value (38.67%) followed by money market (22.25%), and bond funds (7.07%).  On the other side, leading the outflows was Company stock (-59.17%) and Large US Equity (-33.42%).

In terms of October’s overall contributions, 24.17% went into Large US equity, 20.16% went to GIC/Stable Value, 17.41% went to company stock, 7.87% into lifestyle/pre-mix funds and 6.55% into Small US equity.

Overall, lower than average October transfer activity can be traced back to the broader markets with only marginally positive returns.  Leading the way was the NASDAQ (4.12%), the MSCI EAFE (3.41%), the Russell 2000 (1.97%) and the S&P 500 (1.53%). The Dow Jones Industrial Average ended in the red at -0.36%.

The Hewitt report is at

http://was4.hewitt.com/hewitt/services/401k/observ/04_october.htm

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