October 16, 2012
--- The Aon
Hewitt 401(k) Index pointed to continued participant uncertainty in September
as daily transfer volumes remained significantly low compared with historical
Investors were encouraged by 30 consecutive months of job
growth, modest growth in gross domestic product (GDP), the Federal Reserve
announcement of QE3 and positive corporate earnings reported. However, with
uncertainty around the European debt crisis, high unemployment and the fact
that fewer companies beat revenue expectations this year (lowest level since
2009), most participants elected to maintain their current holdings. On
average, only 0.023% of balances transferred on a net daily basis, which is
similar to the volume of transfers over the past three months.
Among defined contribution plan participants who transferred
monies, most transferred from equities into fixed-income investments in
September—a trend that also describes the entire third quarter. Nearly
three-quarters (74%) of the days in September favored transfer activities into
fixed-income funds, representing $237 million in total flows or 0.2% of total
assets. However, when company stock activity is excluded, equity outflows
account for just $46 million (0.03%) of participant balances.
For September outflows, company stock funds lost $191
million (67%), small U.S. equity funds lost $27 million (10%) and large U.S.
equity funds lost $27 million (10%). Similarly, the majority of movement during
the third quarter was out of company stock funds. For the quarter, $750 million
transferred out of equities, however, company stock accounts for well over half
($472 million) of this activity. The next largest outflows were from the small
U.S. asset classes, which lost $154 million (18%) for the quarter.