Average net transfer activity was normal on every day save one during the month ? October 15, which was a low trading volume day. In fact, it was a month that reflected lower average daily net transfer activity as a percent of total balances than any October since the Index’s inception in 1997.
Back to Bonds
Bond funds continued to draw a large amount of participant transfers, with more than 60% flowing to those funds during the month. On the other hand, company stock was the second-most prevalent choice, though drawing just 22.4% of the total.
GIC/Stable value choices suffered the largest outflow, nearly 37% of the total, while large US equity options and international funds each comprised about 25% of the total outflow.
At month end, company stock continued to represent nearly 30% of the total assets tracked by the index followed by large US equity (22.22%), and GIC/Stable value represented 21.24% despite the monthly outflow.
Incoming contributions continued to favor large US equities as well, making up 30% of the total, while company stock garnered more than 20%and GIC/Stable value drew more than 16%. Hewitt noted that contributions represent both employer and employee directed contributions and therefore do not represent a “pure” gauge of participant sentiment.
Back to Normal
October’s unusually modest transfer activity level compares dramatically to September, when transfer activity was above normal on seven of the 15 days when the market was open (see Participants Unmoved By September Markets ).
While last month net fund flows favored fixed income on 80% of the trading days, that was true just half the time in October. Even so, the vast majority of participants did nothing during the month. The highest volume trading day (October 4) was still just 0.08% of total participant balances), and the average monthly net activity was just 0.05%.
Participants’ overall allocation to equities recovered somewhat to 67% in October from just under that level in September. Still, that compares to an average percent of balances in equities of 71.3% since the inception of the Index, and a high of over 74% in late 2000.