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Investing August 15, 2008
Safety – in Numbers: Participants Continue Fixed Income Move
August 15, 2008 (PLANSPONSOR.com) - 401(k)
participants moved assets out of equity into fixed income
investments again in July, according to the results of the
Hewitt 401(k) Index.
Reported by Rebecca Moore
Net transfers were fixed income oriented on 91% of the days during the month.
Similar to the first half of 2008 (See 401(k) Participants Follow Move from Equity Trend in June ), GIC/Stable Value funds were the largest recipients of the net transfers in July. Inflows ($659 million) to this asset class represented 83% of the net transfers, Hewitt said.
Bond funds received 13% of the net inflows during the month, representing $101 million.
Over $692 million was shifted out of equities into fixed income asset classes, the Hewitt data showed. Approximately $228 million moved out of Large U.S. Equity funds, and $208 million moved out of International funds. In addition, $144 million was transferred out of Balanced funds during the month.
The combination of transfers and poor market conditions resulted in a decline in overall equity exposure. Only 61.7% of participants’ assets were allocated to equity investments by the end of July – returning to a level last seen in the middle of 2003, according to Hewitt. In terms of employee discretionary contributions, the equity allocation also slid by 1.3% to 64.0% at the end of July.
The top asset classes gaining participant deferrals during the month were Lifestyle/Pre-mix (20.89%), Large US Equity (19.27%), and GIC/Stable Value (18.66%).
The Hewitt data is here .