Human Resources
401(k) Index & Observations Monthly Details: June 2015

401(k) Index & Observations Monthly Details: June 2015

Market Commentary

According to the Aon Hewitt 401(k) IndexTM, June was another light month of trading activity in defined contribution plans. On average 0.024% balances transferred each day with three days of above-normal1 trading activity. Of the 22 trading days in the month, 13 had more money flow to equities than to fixed income.

  • The most popular asset classes for inflows were money market, small U.S. equity, and GIC/stable value funds.
  • The most common classes for outflows were company stock, bond, and specialty/sector.
  • Target-date funds2 continued to receive the majority of new contributions into individuals’ accounts.

JUNE:

Asset Classes with Most Trading Inflows

Percent of Inflows Index Dollar Value ($ mil)
Money market funds 30% $63
Small U.S. equity funds 27% $56
GIC/stable value funds 19% $41


Asset Classes with Most Trading Outflows

Percent of Outflows Index Dollar Value ($ mil)
Company stock 41% $87
Bond funds 36% $75
Specialty/sector funds 13% $28


Asset Classes with Most Contributions

Percent of Contributions Index Dollar Value ($ mil)
Target-date funds 40% $342
Large U.S. equity funds 20% $172


  • When combining contributions, trades, and market activity in June, participants’ overall allocation to equities increased slightly to 67.0% from 66.7% in May. Future contributions to equities also jumped to 67.2% from 66.9% at the end of May.
  • Trading activity in the second quarter of 2015 was higher than the first quarter—0.43% versus 0.31%—mostly due to higher-than-normal trading activity in May. For the quarter, more money traded out of equity funds and into fixed income instruments.
  • Capital market returns were mixed in June:
    • U.S. Large-Cap equities (represented by the S&P 500 Index), U.S. Fixed Income (represented by the Barclays Aggregate Index), international equities (represented by the MSCI ACWI ex-US Index) delivered negative returns.
    • U.S. Small-Cap equities (represented by the Russell 2000 Index) delivered slightly positive returns.

The following tables show Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending June 30, 2015.


Index Statistics

June 2015 Q2 2015 YTD
Total Transfers as Percent of Starting Balance: 0.20% 0.43% 0.58%
# Fixed Days: 9 (41%) 34 (56%) 59 (50%)
# Equity Days: 13 (59%) 27 (44%) 61 (50%)
# Above Normal1 Days: 3 14 26


Indices Returns

June 2015 Q2 2015 YTD
Barclays Capital U.S. Aggregate Bond Index -1.1% -1.7% -0.1%
S&P 500 -1.9% 0.3% 1.2%
Russell 2000 Index 0.8% 0.4% 4.8%
MSCI All Country World ex-U.S. Index (net) -2.8% 0.5% 4.0%

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.