May 401(k) Transfers Follow Equity Market Rally

June 16, 2009 ( - 401(k) participants followed the equity market rally with net monthly transfers in the Hewitt 401(k) Index for May sliding further in equities and away from fixed income.

A Hewitt news release said in total, $502 million moved out of fixed income during the month.  

The percent of equity-oriented days in May was significantly higher than in past months, with 65% of days experiencing equity-oriented transfers (versus 52% in April). The 20 May trading days saw seven where trading was fixed-income oriented and 13 that were equity oriented.

On average, 0.05% of balances were transferred on a net daily basis during the month, which is on par with the trailing 12-month average of 0.05%, Hewitt said. Three days during the month May had above-normal transfer levels.

According to Hewitt, inflows were spread out among equity investments, although international and emerging markets fund inflows topped $140 million for the month. Large-cap funds had asset gains of $110 million and lifestyle funds bulked up over the month with a $97-million gain.

Meanwhile, stable value funds experienced May outflows of $455 million followed by bonds which shed $46 million, according to Hewitt. The GIC/Stable Value category saw an 86.08% outflow during the month.

Participants’ overall equity allocation was up significantly, from 49% at the end of March to 53.3% at the end of May, because of both positive stock market returns and participants’ transfers, Hewitt said.   Some 13.59% of participants’ overall allocation was in company stock, 31.64% in GIC/Stable Value, 16.06% for Large Equity and 9.65% in Lifestyle/pre-mix.

Hewitt said e mployee-only contributions to equity also grew – 56.6% of new contributions in May versus 55.8% in April.

The May Hewitt data is here .