401(k) participants' trading skyrockets during debt drama

Daily trading volume among 401(k) plan participants soared during the height of Congress' debt-ceiling debate, producing a massive transfer to fixed-income investments from equities, according to Aon Hewitt. Trading volume among the 4.7 million participants in 107 401(k) plan clients of Aon Hewitt jumped to $900 million on July 28 and $862 million on Monday, the day before President Barack Obama signed legislation raising the debt ceiling. The typical daily trade volume is $300 million to $400 million, Pamela Hess, director of retirement research, said in an interview. By Tuesday “things seemed to have quieted down” and by Wednesday “trading volume was near average,” she said. Precise numbers for those days were not immediately available. Of the assets transferred by participants last week, 96% went into fixed-income investments from equity holdings, Ms. Hess added. On Wednesday, “the movement was net into equities, with company stock as a big driver,” she said “This could be people seeing the opportunity to purchase employer stock while the markets are down.” Robert Steyer is a reporter for Pensions & Investments, a sister publication to InvestmentNews, where this article first appeared.