Katrina Draws August K Plan Assets into Fixed Income

September 8, 2005 (PLANSPONSOR.com) - Despite a noticeable K plan participant exodus out of equities and into fixed income as Hurricane Katrina was slamming the US Gulf Coast, overall participant trading activity remained modest in August.

New Hewitt Associates data for its 401(k) Index said that K plan assets on August 29 moved from equity to fixed-income funds at a rate that was 2 ½ times normal volume. Two days later, Hewitt said that movement had sped up to 2.8 times normal.

Despite the Katrina statistical blip, however, participants mostly stuck to their typical patterns over the month with an average daily activity of 0.04%. Thirteen days or 57% of the August trading days saw activity primarily in the equities to fixed income direction, Hewitt said. Still, Hewitt reported, most August trading days saw inflows into international and emerging market funds.

The August data compares to July trends during which activity on two-third of trading days favored equity funds (See  Smaller Stocks, Lifestyle Funds Draw Participants in July ),

During the month, 42.6% of K plan assets flowed out of Large US Equity funds with 27.6% out of company stock and 23.2% out of Small US Equity. Some 41.9% of those assets were headed for GIC/Stable Value funds, 28.6% to International, 14.2% to Money Market, and 7.8% to Emerging Market offerings, Hewitt reported.

Participants’ August asset allocation found 21.8% in Large US equity, 22.6% in company stock, 22.2% in GIC/Stable Value and 7% in Balanced fund offerings.

Finally, overall K plan contributions in August saw 22.8% in Large/US Equity, 18% in GIC/Stable Value and 18.1% into company stock.

The latest Hewitt data is  here .