Investing December 18, 2006

Participants Continue Return to Equities in November

December 18, 2006 (PLANSPONSOR.com) - 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. Large US equity 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 viewed here .

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