Participant Transfers Follow Equity Market Rally

Participant transfers in May moved toward equities and away from fixed income, according to the Hewitt 401(k) Index.

A Hewitt news release said at total of $502 million moved out of fixed income during the month.

The percent of equity-oriented days in May was significantly higher than in past months, with 65% of days experiencing equity-oriented transfers (versus 52% in April). The 20 May trading days saw seven days where trading was fixed-income-oriented and 13 that were equity-oriented.

On average, 0.05% of balances were transferred on a net daily basis during the month, which is on par with the trailing 12-month average of 0.05%, Hewitt said. Three days during the month May had above-normal transfer levels.

According to Hewitt, inflows were spread out among equity investments, although international and emerging markets fund inflows topped $140 million for the month. Large-cap funds had asset gains of $110 million and lifestyle funds bulked up over the month with a $97-million gain.

Meanwhile, stable value funds experienced May outflows of $455 million, followed by bonds, which shed $46 million. The GIC/Stable Value category saw an 86.08% outflow during the month.

Participants’ overall equity allocation was up significantly, from 49% at the end of March to 53.3% at the end of May, because of both positive stock market returns and participants’ transfers. Some 13.59% of participants’ overall allocation was in company stock, 31.64% in GIC/stable value, 16.06% for large equity, and 9.65% in lifestyle/pre-mix.

Hewitt said employee-only contributions to equity also grew: 56.6% of new contributions in May versus 55.8% in April.

The Hewitt data is here.