More Participants Move toward Fixed Income

As the Dow Jones Industrial Average slid 11% in February, 401(k) participants made another large movement toward fixed-income investments, according to the Hewitt 401(k) Index.

A total of $484 million shifted from equities to fixed-income funds during the month, with transfers on nearly 80% of the days in February fixed income-oriented.

According to Hewitt Index data, GIC/stable value funds received 78% of the inflows in February, with $526 million moving into this asset class. Bond and money market funds received $45 million and $21 million, respectively.

Company stock funds also experienced positive inflows of $81 million.

Meanwhile, nearly every equity asset class experienced outflows in February. Large U.S. equity was the biggest loser of the month, with $183 million moving out of these funds, followed by Lifestyle funds with $141 million in outflows and international funds which posted a $120 million outflow.

Due to both market decline and participant transfers, Hewitt said, the overall fixed income allocation in the Hewitt 401(k) index exceeded equity allocation for the first time since the inception of the index. By the end of February, only 47.7% of total assets were in equity investments.

The percentage of employee-only contributions made to equity investments also declined slightly from 57.7% at the end of January to 57.2% at the end of February.

The Hewitt 401(k) Index is here.