June 27, 2012
--- Defined contribution (DC) plan participants
transferred monies from equities into fixed-income investments as the stock
markets dropped substantially during May, Aon Hewitt found. ---
According to the results of the Aon Hewitt 401(k)
Index, 64% of the days had transfer
activities that favored fixed-income funds during the month. In sum, nearly
$140 million moved from diversified equities (equity excluding company stock)
into fixed-income investments.
International equity funds lost $44
million (24%) in net transfers, followed by pre-mixed funds ($34 million, 19%)
and small U.S. equity funds ($29 million, 16%). Seventy percent of the
transferred assets went into bond funds, netting an additional $126 million.
Although major equity indices were down markedly, company stock funds
experienced positive flows for the first month since September 2011, totaling
The overall equity allocation in the
Index was down 1.5 percentage points, to 58.9% at the end of May, from 60.4% at
the end of April, because of market weakness and changes in participant
behavior. Another measure of participant sentiment is discretionary
contributions (employee only contributions). In total, 61.3% of employee
discretionary contributions were directed to equities by the end of May, down
from 62.2% in April.
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