The extreme swings in the domestic stock markets Monday and Tuesday caused heavy telephone volume for large 401(k) providers but, according to most, very little shifting in assets away from equities. In fact, according to Hewitt Associates, for the 10 days ended Thursday there was a net increase in equity exposure among its alliance clients.
An analysis by Hewitt of its 40 largest clients indicated only about $92 million out of a total asset base of $50 billion was shifted from equities to fixed-income funds on Monday, or about 0.18%. Only about 10,000 participants out of 1.4 million actually transferred assets. On Tuesday only about 11,500 participants transferred $102 million following the 554-point drop in the Dow the day before.
Stacy Schaus, Hewitt principal, attributed the minimal shifting to successful investment education programs and general optimism regarding the equity markets.
Retirement plans held 35% of all U.S. mutual fund assets at the end of 1996, according to a study by the Investment Company Institute. Retirement plan investments in mutual funds grew by $245 billion or 25% last year to total $1.2 trillion.
About two-thirds of 1996's increase resulted from asset appreciation, reinvestment of interest, dividends and capital gains. The balance came from net new investment into mutual funds through retirement plan channels. About 16% of total U.S. retirement assets of $7.9 trillion were invested in mutual funds on Dec. 31, 1996. Among employer-sponsored plans, assets invested in mutual funds were $610 million.
About $334 million of that was held from 401(k) plans, $137 billion from 403(b) plans and $106 billion from in other forms of defined contribution plans.
Trustees of the $39.2 billion New York City Employees' Retirement System and the $5.2 billion New York City Fire Department Pension Fund voted to join the lawsuit against Columbia/HCA Healthcare Corp. brought by New York State Comptroller H. Carl McCall.
NYCERS' owns 1.8 million shares of Columbia/HCA stock; the fire department fund owns a little more than 162,000 shares, said New York City Deputy Comptroller Jon Lukomnik.