401(k) Index & Observations Monthly Details: July 2016
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July 2016 Index Comments
As the stock market was climbing in July, 401(k) participants were in profit-taking mode according to the Aon Hewitt 401(k) Index TM . July saw 18 of the 20 trading days favoring inflows to fixed income funds and 90% of the net trading dollars going from equities to fixed income. Four days had above-normal1 trading activity.
Asset Classes with Most Trading Inflows in July
|
Percent of Inflows |
Index Dollar Value ($ mil) |
| GIC/stable value funds |
46% |
$295 |
| Bond funds |
31% |
$198 |
| Money markets funds |
17% |
$112 |
Asset Classes with Most Trading Outflows in July
|
Percent of Outflows |
Index Dollar Value ($ mil) |
| Large U.S. equity funds |
38% |
$246 |
| Company stock funds |
29% |
$191 |
| Small U.S. equity funds |
10% |
$65 |
After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities at the end of July was 65.8%, an increase from 64.6% in June. New contributions continue to favor stocks, with 65.7% of employee contributions investing in equities—a slight increase from 65.5% in June.
Asset Classes with Most Contributions in July
|
Percent of Contributions |
Index Dollar Value ($ mil) |
| Target-date2 funds |
42% |
$406 |
| Large U.S. equity funds |
19% |
$190 |
Asset Classes with Largest Percentage of Total Balance at end of July
|
Percent of Balance |
Index Dollar Value ($ mil) |
| Target-date funds |
23% |
$41,093 |
| Large U.S. equity funds |
22% |
$38,391 |
| GIC/stable value funds |
13% |
$22,461 |
Market Observations
July was a good month for investors with U.S. bonds (represented by the Barclays Capital U.S. Aggregate Bond Index), 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.
The following tables show Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending July 31, 2016:
Index Statistics
| Total Transfers as Percent of Starting Balance |
0.39% |
1.69% |
| Number of Fixed Income Days |
18 (90%) |
107 (74%) |
| Number of Equity Days |
2 (10%) |
38 (26%) |
| Number of Above-Normal1 Days |
4 |
17 |
Indices Returns
| Barclays Capital U.S. Aggregate Bond Index |
0.6% |
6.0% |
| S&P 500 Index |
3.7% |
7.7% |
| Russell 2000 Index |
6.0% |
8.3% |
| MSCI All Country World ex-U.S. Index (net) |
5.0% |
3.9% |
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.