During July there were only two “high” transfer activity days:
- On July 20 the index showed a significant transfer into international equity funds on a day when Fed Chairman Greenspan’s testimony on Capital Hill was lifting Wall Street’s spirits.
- The very next day poor earnings news from overseas and in US markets, sent participants flooding back into US money market funds.
Most of July’s liquidations came from company stock and international equity funds, moving into money market and small US equity funds.
Equity funds continued to represent nearly 74% of total assets at month-end.
The highest asset allocations were in:
- Large US equity (27.28%)
- Company stock (25.91%)
- GIC/stable value (18.10%)
However, large US equity funds reached their lowest allocation in a year and GIC/stable value funds were at their lowest level since the inception of the index.
According to Hewitt, a “normal” level of relative transfer activity is when the net daily movement of participants’ balances as a percent of total 401(k) balances within the Hewitt 401(k) Index equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.
“High” occurs when the net daily movement exceeds two times the average daily net activity.