Transfer activity among participants in 401(k) plans remained low in May despite poor equity performance, Aon Hewitt's monthly 401(k) index report shows.
Only 0.022% of balances transferred on a net daily basis during the month, one of the lowest levels of transfers recorded in the history of the index.
“This is surprisingly low given the market movement,” said Pamela Hess, director of retirement research at Aon Hewitt. “It's been so interesting to follow this for the past few years. It really seems people are numb at this point to market volatility.”
The S&P 500 returned -6.01% in May.
“We would expect to see larger movement with losses than gains. It adds to our surprise with so little activity during the month,” Ms. Hess said.
While there is a positive to the lack of participation in trading because “people aren't market-timing as much,” Ms. Hess said the lack of engagement is concerning, too.
The asset class with the biggest inflows in May was fixed income, with nearly $140 million moved from diversified equities. Company stock also had positive inflows for the first time since last September, at $47 million.
All other equity asset classes had significant outflows, with international equity losing the most at $44 million in net transfers, followed by pre-mixed funds, at $34 million, and small-cap domestic equity funds, at $29 million.