During the first half of the month, after the Dow Jones Industrial Average (DJIA) closed near a 12-year low, transfers were strongly fixed income-oriented, but a few days after the stock market turn on March 10 (when the DJIA closed up 5%), 401(k) participants began to move in the opposite direction. About two-thirds of the days during the second half of the month were equity-oriented, Hewitt said.
However, transfer amounts were larger during the first half of the month compared with the rest of the month (all six days with above-normal levels of transfer activity in March occurred during the first half of the month), so for the month of March the total amount transferred was still fixed income-oriented, with $440 shifted from equities to fixed-income investments. During the first quarter of 2009, a total of $1 billion moved from equities to fixed-income investments.
According to Hewitt data, in March, GIC/stable value funds received 90% of the inflows, with $502 million moving into this asset class. It is also the biggest winner for the quarter—nearly $1.1 billion moved into this asset class. Money market funds also received $53 million in inflows during March, and $78 million in the first quarter.
Company stock experienced $117 million in outflows during March. Large U.S. equity funds had $89 million in outflows, followed by balanced and lifestyle funds with outflows of $83 million each.
Throughout the quarter, the biggest losers were large U.S. equity ($284 million in outflows), international ($269 million in outflows), balanced ($262 million in outflows), and lifestyle funds ($216 million in outflows).
Due to the market surge in March, participants’ overall equity holdings went up slightly from 47.7% at the end of February to 49.1% at the end of March; however, employee-only equity contributions declined further from 57.2% to 55.7%.
GIC/stable value funds took in 26.07% of participant contributions for the month, followed by lifestyle/pre-mix (19.21%) and large U.S. equity (16.79%).
The Hewitt data is available here.