Participants Turn Back to Fixed Income in April

April was the first month this year that the net direction of 401(k) participant transfers moved back toward fixed income.

Sixty percent of days in April had net transfer activity away from equities, according to the Aon Hewitt 401(k) Index. Out of $136 million in net transfer activity for the month, $112 million moved from equities to fixed-income investments. Of the net equity outflows, $35 million (25%) came from company stock, which means $76 million of the outflows are from diversified equities (0.08% of total balances).  

Small U.S. equity assets accounted for 46% ($63 million) of the diversified equity outflows, followed by large U.S. at 13% ($17 million). Emerging markets accounted for 9% ($12 million) of the outflows. GIC/stable value and bond asset classes absorbed the majority of the inflows, as each respectively received 46% ($63 million) and 20% ($28 million). Premixed funds, including target-date and target-risk funds, also received 21% ($29 million) of the net inflows for the month.  

Following the strong first-quarter returns (strongest quarter since 1998), as equity markets declined throughout April, employee discretionary contributions—a gauge of participant sentiment—withdrew slightly to 62.2% in equity allocations (down from 62.6% in March).  

The total asset allocation in equities also declined nominally. Equities now hold 60.4% of total assets, which is a 0.2% decrease for the month.  

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