Data & Research December 16, 2010

Flight to Equities in 401(k)s Continues in November

With mixed November market results, 401(k) participants continued to transfer funds from fixed income investments into equities, according to the latest data from the Aon Hewitt 401(k) Index.
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An Aon Hewitt news release said a total of $217 million moved from fixed income funds into diversified equity investments (equity excluding company stock) during the month, which represented 0.19% of total assets. Seventy-six percent of trading days saw equity-oriented transfers during the month.

All fixed income asset classes had net outflows during the month. Bond funds experienced (net) outflows of $89 million while GIC/stable value funds had $49 million in outflows, Aon Hewitt reported. A sum of $12 million was also shifted out of money market funds. Further, company stock funds experienced the largest outflows of the month, with $110 million moving out of this asset class, which continued the outflow trend of the past several years.

According to the news release, lifestyle/premixed funds received the largest asset boost during the month, with $100 million transferring into this asset class. In addition, all domestic equity asset classes enjoyed modest inflows. Small U.S. equity funds rallied during November, and also received $65 million in net transfers. Large U.S. equity markets were relatively flat, but received $55 million in inflows.

Slight Uptick in Equity Holdings  

In terms of portfolio allocations, Aon Hewitt said total equity holdings were up slightly from 58.3% at the end of October to 58.9% at the end of November. Also, overall, participants’ sentiment toward the stock market did not appear to change much in November, as employee equity contributions remained similar to last month at 60.9%.

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