DC Transfer Activity Low in June

Across Aon Hewitt’s 401(k) Index, total transfer activity was $319 million (0.20%) with one day in June with above normal. However, when trading occurred, plan participants slightly favored fixed income funds over equities.

In June, 57% of trading days saw fixed income receive more inflows, down from 62% of days in May. Overall, net transfer activity moved away from diversified equities (equity assets excluding company stock) by $13 million (0.01%). For the quarter ending June 30, 62% of trading days favored fixed-income funds.

Bond funds received the most inflows in June with $108 million (34%), followed by premixed funds at $68 million (21%), and international funds with $60 million (19%). Most equity-based asset classes had net outflows during the month. Company stock funds led the net outflow activity with $158 million (50%) transferring out, followed by small U.S. equity funds with $98 million (31%) and specialty/sector funds at $25 million (8%).

June was another positive month for the global equity markets. The emerging equity markets, as measured by the MSCI Emerging Markets Index, led the way with a return of 2.7%. This is the fifth consecutive month that this index has posted a positive gain. Both U.S. equities and non-U.S. equities also posted positive results for the month, as the S&P 500 Index gained 2.1% and the MSCI All Country World ex-U.S. Index gained 1.7%. The fixed income market, as measured by the Barclays U.S. Aggregate Index, returned 0.1% during the month.

After incorporating trading and market activity, participants’ overall allocation to equities at the end of June stood at 65.5%, a marginal increase from 65.4% at the end of May. Future contributions to equities remained unchanged at 66.6%.