The Markets December 19, 2006

Participants Continue Return to Equities in November

With the Dow Jones Industrial Average at new record levels and the S&P 500 at highs not seen since 2000, 401(k) participants have begun to respond and net transfers favored equities on 62% of the days during the month, according to the Hewitt 401(k) Index.
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International funds saw the largest transfer in with over $148 million in net transfers, while Lifestyle funds received over $71 million, Hewitt data showed. Company Stock funds and GIC/Stable Value funds saw the largest transfers out of $222 million and $131 million, respectively. Mid-Cap US Equity funds also had negative net transfers of $2 million.

However, company stock funds still held the largest share of participant 401(k) assets as of the end of November at 21.22%. Large US Equity funds held 21.02% of assets, and GIC/Stable Value funds held 20.27%.

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Overall exposure to equities increased by 0.4% to 68.4% for the month. Diversified equities (all equity type asset classes except company stock) rose even faster, with an increase of 0.7%. Participants’ assets in diversified equities was 46.2% for the month of November – a level not seen since the end of 2000, Hewitt said.

Participants also continued to increase their discretionary contributions to equities during November, up 0.9% to 68.5%. This is only half a percentage point away from the highest mark in the history of the Hewitt 401(k) Index of 69.0% set back in March of this year. LargeUSequity funds received 22.32% of participant contributions for the month, followed by GIG/Stable value funds with 16.94% and Lifestyle funds with 14.73%.

Large US Equity funds also received the greatest percentage of overall contributions (20.58%), while company stock funds received 17.74% and GIC/Stable Value funds received 15.75%. Lifestyle funds received 13.04% of overall contributions.

The Hewitt 401(k) Index Observations for November can be viewedhere.
Products December 19, 2006

State Street Global Advisors Lauches International Real Estate ETF

State Street Global Advisors launched an exchange-traded fund Tuesday on the American Stock Exchange that will track the performance of real estate securities outside the US.
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The streetTRACKS(R) DJ Wilshire International Real Estate ETF is the first to monitor the performance of publicly traded real estate securities outside the US, according to a press release from State Street about the new product.

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The new fund is based on the Dow Jones Wilshire exUS Real Estate Securities Index(SM).

“Through the launch of this ETF, we’ve provided investors with simple, comprehensive exposure to the international real estate market, an exciting and otherwise difficult asset class to access,” said James Ross, senior managing director of State Street Global Advisors, in the release.

The company now has more than $113 billion in ETF assets under management as of November 30, 2006, and now manages 67 of the funds worldwide.

State Street came out with two ETFs in mid-November that give investors greater access to the Japanese market. One of the funds focuses on the broad Japanese stock market and measures the performance of Japan’s 1,000 largest stocks, and the other tracks the smallest 15% of companies in the stock market.

For more information, visit www.ssgafunds.com

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