With both temperatures – and the stock market – rising in July, what did participants do?
Participant transfers picked up the pace in July, with above-normal trading volumes on four of the twenty trading days during the month, according to the Aon Hewitt 401(k) Index. That said, on 18 of the 20 trading days transfers favored fixed income funds and 90% of the net trading dollars moved from equities to fixed income.
Nearly half (46%, or $295 million) went to GIC/stable value funds, while nearly a third (31%, or $198 million) went to bond funds, and another 17% ($112 million) moved to money market funds.
As for where those funds came from, 38% was pulled from large U.S. equity funds, 29% from company stock, and the rest from small U.S. equity funds.
Not surprisingly, target-date funds drew 42% of new contributions, with large U.S. equity funds a distant second (19% of contribution dollars).
Post-Brexit Activity
That came on top of a relatively strong trading month in June, which had three days of above-normal trading activity—mostly coming after the Brexit news caused a swing in the equity market.
Overall, a total of 0.19% of balances traded in June (versus 0.39% in July), with 18 out of the 22 days favoring inflows to fixed income instruments. In June most of the transfers came from company stock funds (36%, or $117 million), target-date funds (22%, or $72 million), and large U.S. equity funds (14%, or $47 million), and went into:
- 42% - GIC/Stable value
- 36% - Bond funds
- 16% - Money market
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.
