Human Resources
401(k) Index &  Observations: 2014 Index Comments

2014 Index Comments

  • According to the Aon Hewitt 401(k) IndexTM, 2014 was an exceptionally light trading year for participants in defined contribution plans. Overall, there were 23 days with above-normal* daily transfer activity—well below the total of 47 above-normal days in 2013. In terms of volume, the average daily trading activity also dropped from the prior year, with 0.023% of balances traded in 2014 compared to 0.029% in 2013.
  • As shown on the chart below, most of the above-normal days tended to be clustered around days when the S&P 500 lost ground by 1% or more. October was a particularly volatile time for the S&P 500 index and it proved to be the most active month for trades in the Aon Hewitt 401(k) Index.

  • When participants made trades, there was a slight preference toward moving money from (outflows) equity funds and into (inflows) fixed income funds. Out of the 248 trading days in the year, 130 of them (53%) had participants buying fixed income and selling equities.
  • Company stock led the transfer outflows for the year and represented 60% ($1.7 billion) of net outflows. The other asset classes having outflows in 2014 were small-cap and mid-cap U.S. equity funds, which had 27% ($775 million) and 13% ($362 million) of outflows, respectively.
  • Bond funds had the largest inflows, receiving 29% ($827 million) of all transfers, followed by international funds with 21% ($610 million).
  • On Wall Street, 2014 was a strong year for the U.S. equity markets. The S&P 500 Index returned 13.7% and the Russell 2000 Index returned 4.9%. The fixed income market also had a strong year as the Barclays Aggregate Index gained 6.0%. Non-U.S. equities lagged their U.S. counterparts, as the MSCI All Country World ex-U.S. Index posted negative results during the year, returning -3.9%.
  • After reflecting contributions, trades, fund changes, and market activity, participants ended the year with 66.4% in equities—an increase from 65.2% of assets invested in equities at the end of 2013.

Percent of Balances in Aon Hewitt 401(k) Index

Asset Class Year End 2014 Year End 2013 Change
Money Market 1.4% 1.8% (0.4%)
GIC/Stable Value 11.9% 15.4% (3.5%)
Bond 9.5% 7.9% 1.6%
Balanced 2.3% 2.5% (0.2%)
Lifestyle/Premixed 22.7% 19.1% 3.6%
Large Cap US Equity 22.9% 22.7% 0.2%
Mid Cap US Equity 4.9% 4.5% 0.4%
Small Cap US Equity 4.0% 5.0% (1.0%)
International 6.4% 6.9% (0.5%)
Emerging Markets 0.6% 0.6% 0.0%
Specialty/Sector 0.9% 0.6% 0.3%
Company Stock 11.0% 11.0% 0.0%
Self-Directed Brokerage 1.6% 2.0% (0.4%)

Asset Class Year End 2014 Year End 2013 Change
Equity 66.4% 65.2% 1.2%
Fixed Income 33.6% 34.8% (1.2%)

The following tables show Aon Hewitt 401(k) Index statistics and the returns of major market indices for January 1, 2014 through December 31, 2014.

Index Statistics 2014 YTD
Average Daily Net Activity 0.023%
# Fixed Days 130 (53%)
# Equity Days 118 (47%)
# Above Normal* Days 23

Indices Returns 2014 YTD
Barclays Capital U.S. Aggregate Bond Index 6.0%
S&P 500 Index 13.7%
Russell 2000 Index 4.9%
MSCI All Country World ex-U.S. Index (net) (3.9%)

*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 2 times the average daily net activity of the preceding 12 months.