Employer Stock Hot Transfer Ticket in April

May 13, 2002 (PLANSPONSOR.com) - In a month where equity markets were hammered, daily net participant transfer activity also pulled back, according to the Hewitt 401(k) Index.

Transaction volumes were normal on all but two trading days – and just moderate on those two days (April 10 and April 30).  Overall average monthly net activity was 0.06% of participant balances, compared with the normal average of 0.07%.

Stock ‘Bloc’

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

However, company stock was more than half the amount transferred on 14 of the 20 trading days during the month – both positive and negative.

Hewitt notes that this year, company stock funds saw positive flows in terms of transfers on 52% of days – an unusually high number.  By way of contrast, Hewitt cites 1998 when, during another period of weak markets, money transferred into company stock on a net basis on just 42% of the trading days.

It is also notable that net transfer activity specifically into or out of company stock was higher than average in April–in contrast to the trend in aggregate net transfer activity for the month. Overall average daily net transfer activity into and out of company stock is 0.07%, according to Hewitt, while in April, average daily net transfer activity into and out of company stock was 0.12%.

Holding Patterns

Despite those trends, company stock remained the largest component of the balances in the Hewitt index, comprising just over 29% of the total assets (although all of that money is not under participant direction).  Large US equities held onto its second place position, garnering nearly 23% of the balances, while GIC/Stable Value offerings make up roughly 21% of the total.  All three enjoyed slightly higher proportions than a month ago (see Participant Transfers Roar Back to Life in March ).  Overall, all of the major fund sectors held their own during April.

As for new monies, large US equities drew in roughly 28.5% of the month’s new contributions, followed by GIC/Stable Value (17.2%) and company stock (15.72%).  Lifestyle/premixed offerings attracted 9.65%, while balanced offerings drew nearly 8%, and bond funds pulled in 5.13%.  Perhaps in response to their strong performance during the month, small US equity funds represented nearly 6% of the total.

*A ‘normal’ level of relative transfer activity is when the net daily movement of participants’ balances as a percent of total 401(k) balances within the Hewitt 401(k) Index equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.

Morningstar to Enter Index Game

December 17, 2001 (PLANSPONSOR.com) - Morningstar, Inc is going into the index business and plans to launch a family of style-based equity indexes to serve as tools for portfolio construction, in the first half of 2002.

The Morningstar Indexes will be licensed to institutions for the creation of investment vehicles including mutual funds, exchange-traded funds (ETFs), and derivative securities and will be based on the group’s proprietary Style Box methodology.

Developed initially for the US and European markets, Morningstar’s first index offerings will comprise seven aggregate indices:

Get more!  Sign up for PLANSPONSOR newsletters.

· a broad market index,
· three capitalization indices, large, mid and small, and
· three style indices: value, neutral and growth.

And nine Style Box component indices, specifically,

· large capitalization; value, neutral and growth
· mid capitalization; value, neutral and growth
· small capitalization; value, neutral and growth

By linking their fund and stock categories with tools for building portfolios and tracking the market, Morningstar hopes to make it easier for investors to understand their overall positioning and to make necessary adjustments, according to a company news release.

Dow Jones Indexes will be the calculation agent for Morningstar Indices. They will be calculated real time in US dollars, and the daily closing values will be available in Euros, British pounds and Yen.

Performance data, constituent data, and other descriptive statistics will be made available through major data providers, media outlets, as well as through Morningstar’s Web site.

«