Transfers into Fixed Income Investments Remain Steady

Aon Hewitt’s October 401(k) Index found that despite the recent market rally, 401(k) participants transferred assets from equities into fixed income investments for the fifth consecutive month.

Aon Hewitt reports a total of $108 million moved from diversified equities (equity excluding company stock) into fixed income, representing 0.09% of total assets. In addition, 67% of October days saw positive flows into fixed income investments. 

GIC/stable value funds and bond funds together received nearly 100% of inflows in October. GIC/stable value funds received 71% of the inflows, with $307 million transferring into this asset class. Bond funds received net transfers of $123 million, which represented 28% of the inflows.

On the other hand, company stock funds experienced the largest outflows of the month, with $260 million transferring out of this asset class. Small U.S. equity and large U.S. equity funds had outflows of $45 million and $40 million, respectively. Money market funds also saw $61 million transferring out.

Transfer volume in October was in line with the 12-month trailing average—0.037% of 401(k) balances were traded on a daily net basis versus 0.036% during the past 12 months. According to the findings, four days in October had transfer activity above normal levels.

Participants’ overall equity allocation was up significantly by 1.9%, from 56.9% at the end of September to 58.8% at the end of October, due to strong stock market performance.  

In terms of 401(k) participant-only contributions, the equity allocation decreased slightly, from 61.9% in September to 61.5% in October.