Participants in 401(k) plans moved $921 million in assets into fixed-income investments from equities in September, according to the Hewitt 401(k) Index.
However, overall transfer activity last month was only slightly higher than the average for the trailing 12 months, despite recent market turmoil. Participants transferred 0.06% of balances on a net daily basis in September, compared with 0.05% for the past year.
Four of the five days with the highest transfer activity were in the second half of September. Transfer activity was two to three times normal during the days following the Chapter 11 bankruptcy filing of Lehman Brothers Holdings Inc. and the credit-rating downgrade of American International Group Inc. on Sept. 15 and when the financial rescue plan was defeated by the U.S. House of Representatives on Sept. 29, Hewitt found.
Three fixed-income classes received 96% of the inflows during the month, with $733 million moving into GIC/stable value funds (68% of net transfers); $178 million into bond funds (16% of net transfers); and $133 million into money market funds (12% of net transfers).
International funds experienced the largest outflows, with nearly $330 million transferring out of this asset class. Large-cap U.S. equities also experienced $234 million in outflows, followed by lifestyle funds ($141 million) and balanced funds ($137 million).
Participants overall equity exposure dropped to 58.8% for the month, its lowest level since April 2003. Employee equity contributions declined to 62.4% by the end of September, down 2.9% for the third quarter.
For the quarter, a total of $1.9 billion moved from equities to fixed-income investments, mainly from international funds ($700 million) and U.S. equities ($478 million) into stable value funds ($1.7 billion).