There were nine separate days in May with transfer activity above normal, which is three times as many days that occurred in April. Equities were favored over fixed-income investment vehicles during May. The total net transfer activity reflects 55% in equities, up from 41% in April.
Total net transfer activity was significant, totaling $486 million or 0.33% of total participant balances. This amount is more than twice April’s total of $200 million, and only January has had higher monthly activity (net $930 million) for the year.Net transfer activity into diversified equities (equity excluding company stock) asset classes totaled $316 million or 0.22% of total assets. However, when company stock is included, the transfers total nets $144 million (0.10%) in movement away from equities.
Total net outflows were mainly from two asset classes: bond funds, which decreased by $192 million (40%), and company stock funds, decreasing by $172 million (35%). In addition, small U.S. funds decreased by $45 million (9%), and emerging market funds decreased by $32 million (7%).
Most of the transfer inflows were in premixed funds, which received $203 million (42%), which continues a similar trend in recent months. International funds had $127 million (26%) while mid-U.S. funds had $69 million (14%) of inflows. Specialty/sector funds also received nearly $45 million (9%).
Employee discretionary contributions, another measure of participant sentiment, decreased to 64.0% in equities for May. This is down from 64.3% in April. By the end of May, participants’ overall equity allocation increased to 62.5%, from 61.9% at the end of April. This level establishes a new high as recorded by the Aon Hewitt 401(k) Index since before the financial crisis in 2008.More information is here.