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

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


Loading

Market Commentary

  • July was another light month for trading activity in defined contribution plans, according to Aon Hewitt’s 401(k) Index. Only 0.019% of balances transferred last month marking the ninth consecutive month that trading activity was below 0.03%. Total transfer activity was $291 million with one day in July with above normal trading activity*.
  • When trading occurred, plan participants favored equity funds over fixed income funds for 64% of the trading days. This was the first time since January that the month had a majority of equity-favored days.
  • In July, international funds received the most inflows with $107 million (37%), followed by premixed funds at $70 million (24%), and money market funds with $64 million (22%). The funds with the most outflows were stable value/GIC funds with $96 million (33%), small U.S. equity funds with $79 million (27%), and bond funds with $49 million (17%).
  • July equity market performance was mixed with emerging markets posting positive results and developed markets experiencing losses. The MSCI Emerging Markets Index (measure of companies based in emerging markets) posted a positive 2.1% return, while the MSCI EAFE Index (measure of companies based in developed markets outside of the U.S.) fell by close to -2.0%. The Russell 2000 Index (measure of U.S. small cap companies) fell -6.1% and the S&P 500 (measure of U.S. large cap companies) fell -1.4% throughout the month. The Barclays U.S. Aggregate Index (measure of the U.S. Fixed Income market), fell -0.3% during the month.
  • After incorporating trading and market activity, participants’ overall allocation to equities at the end of July remained unchanged at 65.5%. Future contributions to equities decreased marginally to 66.5% from 66.6%.

The following tables show Aon Hewitt 401(k) Index™ statistics and the returns of major market indices for periods ending July 31, 2014.


Index Statistics

July 2014 YTD
Average Daily Net Activity 0.019% 0.022%
Number of Fixed Income Days 8 (36%) 76 (52%)
Number of Equity Days 14 (64%) 70 (48%)
Number of Above Normal Days 1 10


Index Returns

July 2014 YTD
Barclays Capital Aggregate Bond Index -0.3% 3.7%
S&P 500 -1.4% 5.7%
Russell 2000 Index -6.1% -3.1%
MSCI All Country World ex-U.S. Index (net) -1.0% 8.2%

*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.