Participant Transfers Calm in January

On average, about 0.042% of 401(k) balances transferred on a net daily basis during the month—slightly lower than the trailing 12-month average of 0.052%, Hewitt said. In addition, only one day of the month had an above-normal level of transfers.

However, participants making transfers continued the trend from last year of moving out of equity investments, although the scale of the movement was much smaller compared with last year, the index showed. Participant transfers were fixed income oriented during 60% of the days, and a total of $79 million shifted from equities to fixed-income investments during the month.

Balanced funds experienced the largest outflow for the month, with $69 million transferring out of this asset class. International funds had similar outflows with $68 million, Hewitt data showed.

Interestingly, company stock funds received the largest inflow ($65 million) during the month. GIC/stable value and bond funds received inflows of $60 million and $40 million, respectively.

Largely due to market decline, participants’ overall equity allocation went down from 52.9% at the end of December to 50.5% at the end of January—another historic low, Hewitt said.

On the other hand, Hewitt noted that participant-only equity contribution is another measure of employee sentiment, and it actually ticked up slightly from 57.4% to 57.7% during the month.

Still, GIC/stable value funds received the biggest share of participant-only contributions at 23.79%, while Lifestyle/pre-mix funds gained 19.23% of participant contributions and large U.S. equity won 17.66%.

The Hewitt 401(k) Index Observations is here.