Transfers averaged 0.023% of balance totals per day. The trailing 12-month daily average remained at 0.028%. July had one day when transfer activity reached above-normal levels.
July was a successful month for most equity market participants. Federal Reserve Chairman Ben Bernanke affirmed his commitment to keep interest rates low for the foreseeable future, and earnings beats from bellwethers like Boeing, General Electric and American Express sent most major U.S. market indices higher for the month. Large U.S. equities (as measured by the S&P 500 Index) finished the month about 5% higher, while small U.S. equities (as measured by the Russell 2000 Index) finished 7% higher for the month.
Daily trading slightly favored equity-based investment vehicles during July, which experienced net gains from transfer activity for over half (55%) of the days.
Outflow activity was led by company stock funds, with $235 million (45%) of flows. Bond funds also decreased significantly, by $216 million (41%). Premixed was the third and only additional asset class to experience large outflows, down by $60 million (11%).
The majority of asset classes experienced net inflows during July. Most noteworthy, GIC/stable value funds received $129 million (25%), small U.S. funds received $107 million (20%), and large U.S. funds received $104 million (20%). International and mid U.S. funds also received $74 million (14%) and $57 million (11%), respectively.
Employee discretionary contributions, another measure of participant sentiment, jumped to 64.8% in equities for July, up from 63.8% in June. This is a record high for the Aon Hewitt 401(k) Index since September 2005 (64.7%).
By the end of July, participants’ overall equity allocation reached 63.3% from 62.2% at the end of June. The increase was due to market gains and the current equity allocation was the highest since March 2008 (63.1%).
More information about the July index can be found here.