The 401(k) March Toward Equities Continued in February

March 11, 2011 ( – The march of 401(k) assets toward equity investments in February continued a trend since last October, according to the latest Aon Hewitt 401(k) Index data.

An Aon Hewitt news release said total of $240 million shifted from fixed income funds into diversified equity investments (equity excluding company stock) during the month, representing 0.19% of total assets in the index. Nearly three-quarters of the days in February had equity oriented transfers.

According to the Aon Hewitt announcement, Middle U.S. equity funds reaped the largest inflows during the month, totaling $92 million. Lifestyle funds also received a substantial $89 million with both of these asset classes having experienced positive cash flow during each of the past six months.

Large U.S. equity funds also netted $88 million in cash flows,continuing a positive trend for the fifth consecutive month.

Company Stock Outflows  

At the same time, company stock funds saw the largest outflows, with $159 million heading for the exits. Bond funds also had significant negative transfers of $128 million in February, which is the fourth month in a row with outflows.

Aon Hewitt said an average 0.04% of balances transferred on a net daily basis in February, similar to January, but slightly higher than the latter half of 2010 (0.03%). In addition, four days of the month had above normal levels of transfers, which is the largest number of above normal days since June 2010.

The February index also found that participants' total equity allocation was up to 61.9% at the end of February, from 61% at the end of January, due to both participant transfers and strong returns in the stock markets. Employee equity contributions also increased from 62.4% at the end of January to 63.1% at the end of February.

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