Participant Accounts See Little Movement in March

Most defined contribution plan participants were content to stay put with their investments in March, according to the Aon Hewitt 401(k) Index.

Transfers averaged 0.026% of total balances daily—just above the trailing 12-month average at 0.025%, and March had only three days with transfer activity above normal total net transfer activity in March was moderate, totaling $345 million or 0.24% of total participant balances.   

However, for the first quarter, total net transfer activity was among the highest quarters on record. In total, $1.19 billion moved into diversified equities, which is the largest quarterly dollar reported by the Aon Hewitt 401(k) Index (1997 inception). As a percent of total participant balances, the quarter totaled 0.88%—the highest since the current bull market began in the second quarter of 2009.  

Net daily transfers favored fixed-income funds for 35% of trading days in March, compared with 63% in February. Transfers into diversified equities (equity excluding company stock) asset classes totaled $277 million of total flows or 0.20% of total assets, up significantly from 0.06%.

Similar to February, March total net outflows were heavily concentrated among two asset classes: company stock funds, losing $175 million (51%), and bond funds, losing $155 million (45%). In addition, GIC/stable value and international funds lost $10 million (3%) and $4 million (1%), respectively.  

Net inflows for most asset classes were reported this month. The largest inflows were in large U.S. equity funds, which gained $128 million (37%), followed by premixed funds with $108 million (31%) and small U.S. equity with $62 million (18%).  

Another measure of participant sentiment, employee discretionary contributions, shows participants increased their equity allocations to 64.0% in March, up from 63.4% in February. In addition, fueled by the rising market, participants’ overall equity allocation reached 61.8%, compared with 61.1% at the end of February—the highest equity allocation recorded by the Aon Hewitt 401(k) Index in nearly two years.  

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