401(k) Index & Observations Monthly Details: May 2016
May 2016 Review
According to the Aon Hewitt 401(k) IndexTM, May was another light month of trading activity by 401(k) investors. In total, 0.16% of balances traded in May—which is the same percentage of balances traded in April. For the month of May, there were two days of above-normal1 trading activity.
The asset classes with the most inflows were fixed income funds with equity funds having the most outflows. Twelve out of 21 of trading days showed more inflows to fixed income.
Asset Classes with Most Trading Inflows in May
|
Percent of Inflows |
Index Dollar Value ($ mil) |
| Bond funds |
46% |
$121 |
| GIC/stable value funds |
34% |
$89 |
| Money markets funds |
13% |
$34 |
Asset Classes with Most Trading Outflows in May
|
Percent of Outflows |
Index Dollar Value ($ mil) |
| Large U.S. equity funds |
58% |
$152 |
| Mid U.S. equity funds |
13% |
$34 |
| Company stock funds |
9% |
$24 |
After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities at the end of May remained unchanged at 64.8%. New contributions continue to favor stocks, with 65.7% of employee contributions invested in equities—a decrease from 65.9% in April.
Asset Classes with Most Contributions in May
|
Percent of Contributions |
Index Dollar Value ($ mil) |
| Target-date2 funds |
40% |
$373 |
| Large U.S. equity funds |
20% |
$180 |
Asset Classes with Largest Percentage of Total Balance at end of May
|
Percent of Balance |
Index Dollar Value ($ mil) |
| Target-date funds |
24% |
$39,630 |
| Large U.S. equity funds |
22% |
$37,545 |
| GIC/stable value funds |
13% |
$21,990 |
Market Observations
For the month, U.S. bonds (represented by the Barclays Capital U.S. Aggregate Bond Index) provided minimal returns. 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 May 31, 2016:
Index Statistics
| Total Transfers as Percent of Starting Balance |
0.16% |
1.12% |
| Number of Fixed Income Days |
12 (57%) |
71 (69%) |
| Number of Equity Days |
9 (43%) |
32 (31%) |
| Number of Above-Normal1 Days |
2 |
10 |
Indices Returns
| Barclays Capital U.S. Aggregate Bond Index |
0.0% |
3.5% |
| S&P 500 Index |
1.8% |
3.6% |
| Russell 2000 Index |
2.3% |
2.3% |
| MSCI All Country World ex-U.S. Index (net) |
-1.7% |
0.5% |
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.