Participant transfers are generally a non-event. But in November, those transfers reached the highest level in nearly three years.
According to the Aon Hewitt 401(k) Index, on average, 0.035% of balances traded each day — the highest level since January 2013. In the days leading up to the November 8 election, trading activity was above-normal, with trades moving money from equities to fixed income.
The Aon Hewitt 401(k) Index tracks the 401(k) trading activities of nearly 1.3 million participants, representing nearly $160 billion in collective assets.
The net trading activity on November 9 (the day after the election) was 0.10% of balances — about 4½ times the normal trading level and easily the highest trading day of 2016 and among the highest in recent history.
There were eight above-normal trading days in the month, the highest since May 2015.
That movement stood in sharp contrast to October, when only 0.16% of total balances traded in the month and there were just two days of above-normal trading activity. (A “normal” level of relative transfer activity is when the net daily movement of participants’ balances, as a percentage of total 401(k) balances within the Aon Hewitt 401(k) Index, equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.)
Not surprisingly, GIC/stable value funds were the most popular choice of participants who moved money in November, pulling 50% of the total inflows for the month, followed by money market funds (20%), and small U.S. equity funds (11%).
As for where that money came from, company stock funds, which comprised 73% of the total outflows, led the way, followed distantly by bond funds (15%) and specialty/sector funds (7%).
