The Markets January 24, 2013

Participants Continued Moving Assets in December

Daily transfer volume was above average among defined contribution (DC) plan participants in December, according to the Aon Hewitt 401(k) Index.
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Transfers averaged 0.027% of total balances daily—higher than the trailing 12-month average of 0.024%. December’s count of four days with transfer activity above normal was surpassed only by November during 2012. Total net transfer activity was high in December, totaling $426 million, or 0.32% of total participant balances. While not as high as November’s total, it shows participants continue to take more action than they did earlier in the year, Aon Hewitt said.  

Net daily transfers favored fixed-income funds for 85% of trading days in December. Transfers into fixed-income asset classes from equities totaled $370 million of total flows, or 0.27% of total assets. When company stock activity is excluded, equity outflows totaled $240 million (0.18%) of participant balances.   

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Most equity-based asset classes had net outflows in December—similar to November. Leading the way, company stock funds lost $130 million (31%). U.S. funds together took the largest hit with large U.S. losing $124 million (29%), followed by small U.S. funds losing $73 million (17%) and mid U.S. funds losing $42 million (10%). Premixed funds also had $34 million (8%) of outflows.  

For net inflows in December, GIC/stable value funds gained the most with $251 million (59%) transferring in. In addition, bond funds received $75 million (18%), and money market funds took $63 million (15%) of the monthly inflows. International funds, the only asset class of equities with inflows, had $36 million (9%) of inflows.   

Employee discretionary contributions, another measure of participant sentiments, declined to 61.7% in equities for December from the November average of 62.3%. Despite the sizable transfers into fixed income, participants’ overall equity allocation moderately increased 0.2% to reach 59.4% by the end of December.   

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Diversions January 24, 2013

Travel Likely to See Upswing This Year

Most travelers have a favorite hotel brand, work alone in their hotel rooms and decry the lack of overhead compartment space on airplanes.
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Almost half of business travelers expect to be on the road more often than they were two years ago, according to a survey by Frequent Business Traveler magazine in association with FlyerTalk. A third of business travelers surveyed anticipate taking more trips in 2013 compared with 2012.

The survey of an international sample of 1,349 business travelers during the last quarter of 2012 polled participants from the U.S. (65%), Canada, the U.K. and the European continent.

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The survey also found:

  • Almost three-fourths of those surveyed prefer to stay at their favorite brand(s) of hotel; 58% will stay at their favorite brand even if the property isn’t conveniently located, while the rest will select a different hotel.
  • Of the 86% who work from the hotel when traveling, almost nine out of 10 often do so in their hotel room. Only about 2% said they prefer to work in a lounge and almost 7% claimed they liked to work in the hotel lobby.
  • Security checkpoint-related delays were not a top grievance. Rather, insufficient space for carry-on bags took the top spot, with poor in-flight service a close second. Flight delays came in at number four, cramped seating number five.

Nearly 80% said that they would choose to fly with their preferred airline even if the flights were not as convenient as those on a different airline. Of those who have a preferred airline, only about 17% said that their experience on a different airline was highly noticeable. Almost all those surveyed said they were members of an airline loyalty program. Of these, approximately three quarters were members of two to five frequent flyer programs and almost 15% were members of six or more.

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