Equities Finally Pull Ahead to Win 401(k) Assets

Though Mid US Equity and Small US Equity offerings each saw relatively small negative net transfers in October, Large US Equity offerings had the highest transfers in at over $133 million, the Hewitt data showed. The Large US Equity asset class had positive flows for the first time this year in September, but still had lost $900 million to participant transfers year-to-date as of the end of September.

Lifestyle funds followed Large US Equities closely, winning over $130 million of assets transferred by 401(k) participants in October. In the past four months lifestyle funds have seen positive net transfers of over $440 million, the highest amount for any four month period in the history of the Index, Hewitt said. Participants moved nearly $77 million to International Equity offerings in the month.

GIC/Stable Value offerings saw a reversal of participant favor in October, with a negative net transfer amount of nearly $87 million for the month. As in September, company stock was the biggest loser with net transfers out of over $311 million. Company stock funds, however, continued to hold the largest percentage of participant 401(k) assets among asset classes at 21.48%.

Participants’ exposure to equities continued to inch up with the help of strong market performance to 68% of 401(k) assets, compared to 67.4% in September. Large US Equity funds held 20.92% of participant assets as of the end of October, followed by GIC/Stable Value offerings with 20.72% of total 401(k) assets.

Large US Equity funds gained 20.62% of overall contributions to 401(k) accounts in October, followed by company stock at 16.47% and GIC/Stable Value at 16.37%. Almost 22% of participant contributions went to Large US Equity funds during the month. Participant contributions to Lifestyle/Pre-Mix funds were at an all time high of 15.8% of contributions, Hewitt said.

Hewitt 401(k) Index results for October can be viewed here