Participant Transfer Volumes Low in August

September 18, 2013 ( – Defined contribution (DC) plan participants’ daily transfer volumes were low in August, according to the Aon Hewitt 401(k) Index.

The index found transfers averaged 0.022% of balance totals per day. The trailing 12-month daily average remained at 0.028%, and August had zero days with transfer activity reaching above-normal levels. Since the end of June, daily activity has dropped off significantly in comparison with the first half of the year.

Last month proved to be difficult for global equity and fixed-income investors, the index showed. According to Aon Hewitt, tapering comments from members of the Federal Reserve and the announcement of possible U.S. military strikes against Syria sent most major capital market indices lower for the month. Losses ranged from the Barclays Capital Aggregate Bond Index (-0.51%) to the Russell 2000 Index (-3.2%).

Daily trading in August favored fixed-income investment vehicles, which experienced net gains from transfer activity for more than half (59%) of the trading days. Net transfer activity for the month moved away from diversified equities (equity assets excluding company stock) by $34 million (0.02%). Total transfer activity across the index was $377 million for the month.

Outflow activity was led by bond funds, with $191 million (51%) in outflows. Premixed funds also decreased significantly, by $108 million (29%). Large U.S. funds were also down by $35 million (9%) due to flows.

Net inflows for August were led by GIC/stable value funds, which received $219 million (58%) of the flows. Money market funds received $51 million (14%), and international funds received $43 million (11%).

Employee discretionary contributions, another measure of participant sentiment, decreased to 64.3% in equities for August, down from 64.8% in July. By the end of August, participants’ overall equity allocations averaged 62.8%, down from 63.3%. The decrease was due primarily to the slide in the markets, Aon Hewitt said.

More information about the August index can be found here.