Relatively Speaking, Transfer Activity Remains High

While trading activity was three times the normal level, Thursday’s trading activity was just 0.21% of the total balances tracked by the index. Participant transfers flowed to fixed income investments on a net basis every day last week, as they have every day since August 26.

Monday’s activity snagged headlines as participants transferred nearly $400 million in plan assets to stable value investments as major US stock indexes dropped anywhere from 5% to 7% – and some employer securities fared even worse.

Back to Normal

Trading activity returned to normal levels on Tuesday as the markets stumbled to modest losses, but spiked again to moderately high levels on Wednesday, roughly 1.8 times the normal level.

While notable compared with trading norms established within the index, participant transfer activity has been quite modest over time regardless of market turmoil or economic worries.

However, net transfers coupled with the market declines left the overall equity exposure of the Hewitt 401(k) Index at 61.5% on Monday, down from 68.5% at the end of August, the lowest equity exposure since Hewitt launched the index in August 1997.

Additionally, Hewitt noted only a modest uptick in participant call volume, a trend echoed at other service providers.

The Index tracks the daily transfer activity of nearly 1.5 million US employees with $71 billion in assets