Participant Transfers to Fixed-Income Continue

September 20, 2012 ( Defined contribution plan participants transferred assets from equities into fixed-income investments again in August, according to the Aon Hewitt 401(k) Index.

Overall, 74% of the days in August had transfer activities that favored fixed-income funds representing $277 million in total inflows or 0.2% of total assets. However, when company stock activity is excluded, total equity outflows amounts to just $122 million (0.1%) of participant balances.  

The Index suggests much participant uncertainty in August as daily transfer volumes remained very low compared with historical levels. On average, only 0.021% of balances transferred on a net daily basis, which is similar to the volume of transfers over the past three months. August had just one day of above-normal transfer level—identical with July. Another month of low transfer activity further diminished the trailing 12-month daily average, which dropped to 0.027%.  

In net outflows, company stock funds lost $155 million (49%), small U.S. equity funds lost $93 million (29%), and mid-U.S. equity funds lost $23 million (7%) for the month.  

 All fixed-income asset classes recorded net inflows in August. Similar to last month, bond funds received the most inflows with $327 million (41%), while GIC/stable value funds took in $80 million (25%) and money market funds received $49 million (16%). The lifestyle/pre-mixed asset class also had $38 million of inflows.  

Employee-only contributions showed a slight decline from 62.3% in equities to 62.1% at the end of August. Participants’ overall equity allocation increased by 0.4% to 59.5% at the end of August, due to the market gains among most equity asset classes.  

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