Transfers averaged 0.040% of total balances daily—significantly higher than the trailing 12-month average of 0.025%. January’s count of nine days with transfer activity above normal is the most the index has seen since October 2008, when there were ten days with above-normal transfer activity.
In January, total net transfer activity was high, totaling $930 million, or 0.69% of total participant balances. This is more than double December’s total of $426 million. This movement shows participants took more action in January than they have in the past 17 months, since July 2011, when net transfer activity totaled $1.07 billion (0.81% of participant balances).
The Aon Hewitt 401(k) Index reported optimistic trading movement among defined contribution plan participants in January. Net daily transfers favored equity funds for 90% of trading days in January, which is a reversal of the past 10 months favoring fixed income funds. Transfers into diversified equity (equity excluding company stock) asset classes totaled $811 million of total flows, or 0.60% of total assets.
Most fixed-income-based asset classes had net outflows in January. Leading the way, GIC/stable value funds lost $365 million (39%). In addition, bond funds lost $301 million (32%), followed by money market funds losing $81 million (9%). The only asset class of equities with a net loss was company stock funds, with $184 million (20%) of outflows.
For net inflows in January, all diversified equity-based asset classes had gains. Premixed funds gained the most with $260 million (28%) transferring in. Large U.S. equities received $229 million (25%), and international funds took in $163 million (18%) of monthly inflows. Also, small U.S. equity gained $127 million (14%).
Employee discretionary contributions, another measure of participant sentiments, increased to 62.2% in equities for January, up from the December average at 61.7%. Participants’ overall equity allocation increased 1.6% to reach 61.0% by the end of January, up from 59.4% at the end of December.
The Aon Hewitt 401(k) Index is here.