Investors in 401(k) plans didn’t do a lot of trading within their accounts in September, according to the latest 401(k) Index by Aon Hewitt.
Daily transfer volumes averaged 0.026 percent of balance totals per trading day in September, just slightly below the 12-month average. There were only three days that experienced above-normal levels of trading.
According to Aon, a September statement by the Federal Reserve stating that it would not begin tapering its monthly bond-buying program had a positive impact on the equity and bond markets. The S&P 500 returned 5.2 percent during the period and non-U.S. equity indices also posted positive results. The fixed-income markets experienced rising yields for most of the third quarter, but the Fed’s announcement provided a boost as prices rallied and yields declined, helping to bring the fixed-income markets into positive territory for the third quarter, the company found.
Daily trading favored fixed-income investment vehicles in September, which experienced net gains from transfer activity for 17 of the 20 trading days. During the third quarter, fixed income was favored for 63 percent of days, while year-to-date daily trading was equally divided between fixed income and equities.
Bond funds lost the most in the third quarter, with 37 percent, or $469 million, flowing out of these funds. Stable value funds received $705 million of the inflows, Aon said.
Employee discretionary contributions, which is another way to measure participant sentiment, increased to 64.9 percent in equities for September, up from 64.3 percent in August. By the end of September, participants’ overall equity allocations averaged 63.3 percent, up from 62.8 percent.