Callan Associates DC index, which measures DC plan allocations, performance and flows, dropped 15.5% in the fourth quarter and was down 28% for 2008, with investor fears exacerbated by volatility in the equity markets and mounting job losses.
The index also showed the asset allocation average to fixed income reached an all-time high of 42.3% for the quarter, compared to 29.5% a year ago and a historical quarterly average allocation to fixed income of 32.2% since the index was first created in 2006. Market performance, failure to rebalance and transfers all contributed to the trend away from equities, Callan said in a news release.
Despite market volatility, plan participants engaged in little transfer activity in the fourth quarter, as total index turnover declined to 0.51% of assets in the fourth quarter from 1.13% in the third quarter, under the historical average of assets of 0.77%.
Money transferred in the fourth quarter generally stayed away from equities and moved to safe haven asset classes, with nearly two-thirds (65%) into stable value and target-date funds capturing most of the rest. Outflows were seen in domestic/global balanced; domestic small/midcap equities, global equities, international equities and emerging markets equities, as well as real return/TIPS and specialty equity.
The index includes data from 70 DC plans with $40 billion in assets.