401(k) Index & Observations Monthly Details: June 2016
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June 2016 Review
A volatile time on Wall Street at the end of June saw investors making trades, according to the Aon Hewitt 401(k) IndexTM. Despite a slow start to the month,there were three days of above-normal1 trading activity—mostly coming after the Brexit news caused a swing in the equity market. Overall, a total of 0.19% of balances traded in June with 18 out of the 22 days favoring inflows to fixed income instruments.
Asset Classes with Most Trading Inflows in June
|
Percent of Inflows |
Index Dollar Value ($ mil) |
| GIC/stable value funds |
42% |
$138 |
| Bond funds |
36% |
$118 |
| Money markets funds |
16% |
$51 |
Asset Classes with Most Trading Outflows in June
|
Percent of Outflows |
Index Dollar Value ($ mil) |
| Company stock funds |
36% |
$117 |
| Target-date2 funds |
22% |
$72 |
| Large U.S. equity funds |
14% |
$47 |
After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities at the end of June was 64.6% a slight decline from 64.8% in May. New contributions continue to favor stocks, with 65.6% of employee contributions invested in equities—a decrease from 65.7% in May.
Asset Classes with Most Contributions in June
|
Percent of Contributions |
Index Dollar Value ($ mil) |
| Target-date2 funds |
41% |
$396 |
| Large U.S. equity funds |
19% |
$189 |
Asset Classes with Largest Percentage of Total Balance at end of June
|
Percent of Balance |
Index Dollar Value ($ mil) |
| Target-date funds |
24% |
$39,790 |
| Large U.S. equity funds |
22% |
$37,371 |
| GIC/stable value funds |
13% |
$22,074 |
Second Quarter 2016 Review
The second quarter came to a close on Wall Street with investors favoring fixed income funds over equities. As a percentage of balances, 0.50% of balances traded in the second quarter of 2016, which is lower than the 0.82% percentage of balances traded in the first quarter of 2016.
Trading activity favored fixed income over equities. Bond, GIC/stable value and money market funds received the majority of the inflows. Large U.S. equity funds, company stock, and target-date funds had the largest percentage of outflows.
Asset Classes with Most Trading Inflows in Q2 2016
|
Percent of Inflows |
Index Dollar Value ($ mil) |
| Bond funds |
45% |
$369 |
| GIC/stable value funds funds |
38% |
$311 |
| Money market funds |
14% |
$114 |
Asset Classes with Most Trading Outflows in Q2 2016
|
Percent of Outflows |
Index Dollar Value ($ mil) |
| Large U.S. equity funds |
32% |
$265 |
| Company Stock |
24% |
$195 |
| Target-date funds |
12% |
$102 |
| International funds |
12% |
$100 |
Market Observations
- For the month, U.S. bonds (represented by the Barclays Capital U.S. Aggregate Bond Index) and U.S. Large-Cap equities (represented by the S&P 500 Index) had positive returns. U.S. Small-Cap equities (represented by the Russell 2000 Index) and International equities (represented by the MSCI All Country World ex-USA Index) had negative returns.
- In the second quarter of 2016, 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), and U.S. Small-Cap equities (represented by the Russell 2000 Index) had positive returns. International equities (represented by the MSCI All Country World ex-USA Index) had negative returns.
Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending June 30, 2016:
Index Statistics
| Total Transfers as Percent of Starting Balance |
0.19% |
0.50% |
1.31% |
| Number of Fixed Income Days |
18 (82%) |
44 (69%) |
89 (71%) |
| Number of Equity Days |
4 (18%) |
20 (31%) |
36 (29%) |
| Number of Above-Normal1 Days |
3 |
5 |
13 |
Indices Returns
| Barclays Capital U.S. Aggregate Bond Index |
1.8% |
2.2% |
5.3% |
| S&P 500 Index |
0.3% |
2.5% |
3.8% |
| Russell 2000 Index |
-0.1% |
3.8% |
2.2% |
| MSCI All Country World ex-U.S. Index (net) |
-1.5% |
-0.6% |
-1.0% |
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.