Transfers into Fixed Income Investments Remain Steady

November 8, 2011 ( - Aon Hewitt’s October 401(k) Index found that despite the recent market rally, 401(k) participants transferred assets from equities into fixed income investments for the fifth consecutive month.

Aon Hewitt reports a total of $108 million moved from diversified equities (equity excluding company stock) into fixed income, representing 0.09% of total assets. In addition, 67% of October days saw positive flows into fixed income investments. 

GIC/stable value funds and bond funds together received nearly 100% of inflows in October. GIC/stable value funds received 71% of the inflows, with $307 million transferring into this asset class. Bond funds received net transfers of $123 million, which represented 28% of the inflows.

On the other hand, company stock funds experienced the largest outflows of the month, with $260 million transferring out of this asset class. Small U.S. equity and large U.S. equity funds had outflows of $45 million and $40 million, respectively. Money market funds also saw $61 million transferring out.

Transfer volume in October was in line with the 12-month trailing average—0.037% of 401(k) balances were traded on a daily net basis versus 0.036% during the past 12 months. According to the findings, four days in October had transfer activity above normal levels.

Participants’ overall equity allocation was up significantly by 1.9%, from 56.9% at the end of September to 58.8% at the end of October, due to strong stock market performance.  

In terms of 401(k) participant-only contributions, the equity allocation decreased slightly, from 61.9% in September to 61.5% in October.