Aon Hewitt’s September 401(k) Index observations were released yesterday, showing that despite steep losses in the stock market in September, participant transfers were very modest. On average, 0.03% of balances transferred on any given day. This is in line with the trailing 12-month average daily net transfer activity levels.
Other key findings showed:
* The direction of transfers was almost neutral for the month. Although 401(k) participants moved their account balances out of fixed income funds and into equities on a majority of days (57%), the net dollars transferred went the opposite direction. A total of $60 million was transferred out of equities and into fixed income investments, representing 0.05% of total assets.
* For the quarter, transfers were strongly fixed-income oriented. A total of $1.4 billion moved out of equities and into fixed income investments, which represented 1.1% of total assets. The vast majority of these transfers took place in July ($946 million) and August ($432 million).
* Nearly all equity asset classes saw some outflows. Small U.S. equity funds saw the largest outflows in September, totaling $41 million. For the quarter, they lost $321. Premixed portfolios had $34 million of outflows for the month and $268 million for the quarter. 401(k) participants also moved away from large U.S. equity funds and international funds. Large U.S. equity funds lost $25 million in September and $472 million for the quarter. International funds had $14 million transferring out for the month, and $243 million during the third quarter.
* On the other hand, fixed-income asset classes received most of the net transfers. Bond funds received the largest amount of inflows in September, with $106 million moving to this asset class. For the quarter, $383 million flowed into bond funds. Stable value funds and money market funds also received $1 billion and $145 million for the quarter, respectively.
* Participants’ overall equity allocation was down 1.8% from 58.7% to 56.9%. This was mainly due to the significant loss in the stock market.
* Participant discretionary contributions to equities (employee only contributions) also declined slightly from 62.1% to 61.9% in September.
