December 401(k) Transfers Stagnant

December’s transfer activity among 401(k) participants, measured by Hewitt’s 401(k) Index, was lower than average, with only 0.04% of plan balances transferring during the month. The average sits around 0.065% historically.

Money that did transfer in December usually shifted toward diversified equity funds–particularly international and small U.S. equity funds, which netted $130 million and $87 million in transfers, respectively, according to Hewitt. Trading activity went towards fixed-income investments in 50% of December trading days .

Overall, 2004 was a quiet year for 401(k) transfers, according to Hewitt, with an average of 0.046% of balances being transferred each day during the year. This number was highest at the beginning of the year, but declined as the year progressed, according to the company. June was the month with the lowest daily transfers out of any month in the history of the index.

Of transfers during the year, international stock funds attracted the largest amounts of transfer money, with most of that flowing in the final two months of the year. Small US equity funds gained more than $300 million for the year, while large US equities lost $175 million on the year.

In December, money generally flowed out of stable value funds, although overall, the year saw inflows for this category of investment.

Overall, 401(k) participants’ discretionary contributions were 64% allocated towards stocks in December, down from the 66% allocation seen in early 2004. Overall investment in stocks for all 401(k) participants sits at 66.5%.

The Hewitt Index observations are at  http://was4.hewitt.com/hewitt/services/401k/observ/04_december.htm ..