Funds Continue to Flow to TDFs, From Company Stock

Target-date funds continued to draw a plurality of new contributions, while participants continued to transfer funds from company stock, according to a new report.

TDFs received the most new money in terms of contributions in June — $342 million — according to the Aon Hewitt 401(k) Index. That was 40% of the new contributions tracked in the index, which tracks the activity of nearly 1.3 million participants, representing nearly $160 billion in collective assets.

While June was another quiet month for participant transfers, 41% of the money that moved ($87 million) came from company stock holdings, with $75 million from bond funds (36% of the total) close behind. Transfers flowed into money market funds (30%), small cap U.S. equity funds (27%) and GIC/stable value funds (19%).

Transfer activity was light in June, however. On average, just 0.024% balances transferred each day, with three days of above-normal trading activity, compared with May, when there were eight days of above-normal trading activity, and when, on average, 0.031% of balances transferred each day — making May the first month with transfers above 0.03% since October 2013.

Indeed, trading activity in the second quarter of 2015 was higher than the first quarter — 0.43% versus 0.31% — mostly due to higher-than-normal trading activity in May.

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