Defined contribution plan participants favored investments in fixed income in February, a reversal of trends from the past four months, according to Aon Hewitt’s 401(k) Index.
Net transfer activity for February moved slightly away from diversified equities by $21 million, but total transfer activity across the Index was low, at $264 million.
Employees who made discretionary contributions to equities increased to 66.5 percent in February, up from 65.6 percent in January.
Overall, participants’ equity allocation increased to 65.5 percent at the end of February, up from 64.7 percent in January.
Global equity markets rebounded from a poor showing in January, Aon Hewitt found. U.S. equities, as measured by the S&P 500, gained 4.6 percent, and non-U.S. equities, as measured by the MSCI All Country World ex-U.S. Index, gained 5.1 percent.
Emerging markets also increased in February, returning 3.3 percent.
Fixed income asset classes experienced net inflows in February. Bond funds had the largest inflows with gains of $79 million and GIC/stable value funds had gains of $51 million. Specialty/sector funds had $35 million of monthly inflows, while international funds and self-directed window funds both received around $29 million, according to Aon Hewitt.
Net outflow activity was led by company stock funds with $191 million, large U.S. equity funds with $37 million and small U.S. equity funds with $29 million transferring out.