401(k) Index & Observations Monthly Details: August 2016
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August 2016 Review
Trading in defined contribution plans in August was amongst the lowest on record, according to the Aon Hewitt 401(k) IndexTM. Just 0.11% of total balances traded in the month—the second lowest monthly total ever (0.10% in April 2012). No days in August had above-normal1 trading activity. The average daily trading activity for the month was 0.013%, the lowest monthly level since Aon Hewitt began tracking trading activity in 1997.
Asset Classes with Most Trading Inflows in August
|
Percent of Inflows |
Index Dollar Value ($ mil) |
| Bond funds |
44% |
$86 |
| GIC/stable value funds |
22% |
$42 |
| Emerging markets funds |
13% |
$26 |
Asset Classes with Most Trading Outflows in August
|
Percent of Outflows |
Index Dollar Value ($ mil) |
| Company stock funds |
43% |
$83 |
| Large U.S. equity funds |
31% |
$61 |
| Small U.S. equity funds |
8% |
$15 |
After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities at the end of August was 64.9% a decrease from 65.8% in July. New contributions continue to favor stocks, with 65.6% of employee contributions investing in equities—a slight decrease from 65.7% in July.
Asset Classes with Most Contributions in August
|
Percent of Contributions |
Index Dollar Value ($ mil) |
| Target-date2 funds |
41% |
$343 |
| Large U.S. equity funds |
19% |
$162 |
Asset Classes with Largest Percentage of Total Balance at end of August
|
Percent of Balance |
Index Dollar Value ($ mil) |
| Target-date2 funds |
24% |
$41,266 |
| Large U.S. equity funds |
22% |
$38,525 |
| GIC/stable value funds |
13% |
$22,571 |
Market Observations
August was a good month for investors U.S. Large-Cap equities (represented by the S&P 500 Index), U.S. Small-Cap equities (represented by the Russell 2000 Index), and International equities (represented by the MSCI All Country World ex-USA Index) all posting positive returns. U.S. bonds (represented by the Barclays Capital U.S. Aggregate Bond Index) posted slightly negative returns. The following tables show Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending August 31, 2016:
Index Statistics
| Total Transfers as Percent of Starting Balance |
0.11% |
1.79% |
| Number of Fixed Income Days |
12 (55%) |
119 (71%) |
| Number of Equity Days |
10 (45%) |
48 (29%) |
| Number of Above-Normal1 Days |
4 |
17 |
Indices Returns
| Barclays Capital U.S. Aggregate Bond Index |
-0.1% |
5.9% |
| S&P 500 Index |
0.1% |
7.8% |
| Russell 2000 Index |
1.8% |
10.2% |
| MSCI All Country World ex-U.S. Index (net) |
0.6% |
4.5% |
1 A “normal” level of relative transfer activity is when the net daily movement of participants’ balances, as a percent of total 401(k) balances within the Aon Hewitt 401(k) IndexTM equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months. A “high” relative transfer activity day is when the net daily movement exceeds two times the average daily net activity. A “moderate” relative transfer activity day is when the net daily movement is between 1.5 and 2 times the average daily net activity of the preceding 12 months.
2 Target-date funds also include the amounts in target-risk funds for companies who do not have target-date funds. The amount in the target-risk funds is less than 10% of the total.