There was only one “high” trading volume day during the month (November 22), when volumes were about 2.25 times normal. However, there were six moderate volume days, and none with less than normal levels. Hewitt notes that a majority of those above-average transfer days occurred when the market was rising. Often, the direction of money on those days was toward stock investments.
Hewitt notes that most diversified equity funds netted positive net transfers by the end of the month – in fact, large and mid cap US equity investments enjoyed their first month of net transfer inflows since March.
Still, fixed income investments fared better overall in terms of fund flows, with net activity favoring fixed income investments on 11 of the 20 trading days during the month. Moreover, including company stock, net transfers into equities were negative for the month. Overall trading volume was above average, with 0.09% of balances transferred on a daily basis – though that was down from October’s pace (see October Markets Move Participants ).
GIC/Stable value investments continued to dominate the asset allocation of the Hewitt 401(k) Index, albeit by a diminishing margin. The sector made up 26.55% of the total index at month end, compared with 25.29% for company stock and 18.38% for large US equity. Balanced funds were nearly 9.5% of the total, while bond funds represented 5.04% and lifestyle/premixed another 4.35%. Money market offerings held a surprisingly strong 3.34%, while international funds represented 2.55%.
As for new monies, large US equity offerings held the lead, drawing nearly 23% of the November contributions, compared with 21.23% for GIC/stable value, and 20.44% directed toward company stock. Bond offerings drew nearly 8%, while just short of 6% went toward balanced choices. More than 7.5% was invested in lifestyle/premixed alternatives.
As a percentage of total balances, the recovering stock market buoyed stock investments to 59.4% of the total Hewitt 401(k) Index portfolio at November’s end, compared with a record low 57.2% in September.
Overall, the percentage of future contributions directed to stock-type investments increased in November to 62.3%, compared with a high of 70% in January 2002.
Overall, for the year, more than $2.5 billion dollars transferred out of equity investments. Much of those dollars went to GIC/stable value during the course of the year, which netted more than $1.5 billion in transfers in. This has been the investment type with the greatest dollar amount of cashflows in this year, according to Hewitt.