DC Transfer Activity Low in June

Trading activity in defined contribution plans in June continued to be light—marking the second lowest monthly level since Aon Hewitt began tracking participant transfers in 1997.

Across the Index, total transfer activity was $319 million (0.20%) with one day in June with above normal. However, when trading occurred, plan participants slightly favored fixed income funds over equities.

In June, 57% of trading days saw fixed income receive more inflows, down from 62% of days in May. Overall, net transfer activity moved away from diversified equities (equity assets excluding company stock) by $13 million (0.01%). For the quarter ending June 30, 62% of trading days favored fixed income funds.

Bond funds received the most inflows in June with $108 million (34%), followed by premixed funds at $68 million (21%), and international funds with $60 million (19%). Most equity-based asset classes had net outflows during the month. Company stock funds led the net outflow activity with $158 million (50%) transferring out, followed by small U.S. equity funds with $98 million (31%) and specialty/sector funds at $25 million (8%).

June was another positive month for the global equity markets. The emerging equity markets, as measured by the MSCI Emerging Markets Index, led the way with a return of 2.7%. This is the fifth consecutive month that this index has posted a positive gain. Both U.S. equities and non-U.S. equities also posted positive results for the month, as the S&P 500 Index gained 2.1% and the MSCI All Country World ex-U.S. Index gained 1.7%. The fixed income market, as measured by the Barclays U.S. Aggregate Index, returned 0.1% during the month.

After incorporating trading and market activity, participants’ overall allocation to equities at the end of June stood at 65.5%, a marginal increase from 65.4% at the end of May. Future contributions to equities remained unchanged at 66.6%.