Human Resources
401(k) Index &  Observations Monthly Details: August 2014

401(k) Index & Observations Monthly Details: August 2014

Market Commentary

  • According to Aon Hewitt’s 401(k) Index™, August trading activity continued to be light in defined contribution plans, with only 0.020% of balances transferring. This marks the tenth consecutive month that trading activity was below 0.03%. Total transfer activity was $214 million or 0.13% of total assets, with zero days in August having above normal trading activity*.
  • When trading occurred, plan participants favored fixed income funds over equity funds for 65% of the trading days. This was a reversal from July when more trading days favored equity funds, but consistent with the rest of 2014. Overall, transfer activity moved away from diversified equities (equity assets excluding company stock) by $78 million (0.05%).
  • Stable value/GIC funds received the most inflows with $61 million (28%), while bond funds took in $40 million (19%) and money market funds received $32 million (15%). The options with the most outflows were small U.S. equity funds with $93 million (44%), company stock funds with $64 million (30%), and mid U.S. equity funds with $40 million (19%) for the month.
  • The global equity markets rebounded from a poor showing in July as the S&P 500 returned 4.0% and the MSCI All Country World ex-U.S. Index returned 0.6% during the month of August. U.S. small-cap stocks, as measured by the Russell 2000, outperformed their large-cap counterparts, posting a return of 5.0%. The emerging equity market posted its seventh consecutive month of positive performance, as the MSCI Emerging Markets Index gained 2.3%. The Barclays U.S. Aggregate Index, a measure of the U.S. fixed income market, also posted positive performance during the month with a return of 1.1%, as the yield on the 10-year Treasury decreased from 2.58% to 2.35%.
  • After incorporating trading and market activity, participants’ overall allocation to equities was up slightly at 66.0% from 65.5%. Future contributions to equities decreased marginally to 66.4% from 66.5%.

The following tables show Aon Hewitt 401(k) Index™ statistics and the returns of major market indices for periods ending August 29, 2014.


Index Statistics

August 2014 YTD
Average Daily Net Activity 0.020% 0.022%
Number of Fixed Income Days 11 (65%) 87 (54%)
Number of Equity Days 6 (35%) 76 (46%)
Number of Above Normal Days 0 10


Index Returns

August 2014 YTD
Barclays Capital Aggregate Bond Index 1.1% 4.8%
S&P 500 4.0% 9.9%
Russell 2000 Index 5.0% 1.8%
MSCI All Country World ex-U.S. Index (net) 0.6% 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) Index™ 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 two times the average daily net activity of the preceding 12 months.