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

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

September 2015 Review

According to the Aon Hewitt 401(k) IndexTM, defined contribution participants transferred money from equities to fixed income amid a rough September on Wall Street. Fixed income funds were the only asset class with positive net inflows for the month. Additionally, 81 percent of the trading days in September favored fixed income--the highest ratio of days to fixed income funds in two years.

September also had four days of above-normal1 trading activity, which is the highest number of above-normal days in a month since May. On average, participants transferred 0.026% of total balances in September.

When combining contributions, trades, and market activity, participants’ overall allocation to equities declined to 64.6% at the end of September from 65.4% at the end of August. Future contributions to equities decreased marginally to 66.7% from 66.8% in August.


Asset Classes with Most Trading Inflows in September

Percent of Inflows Index Dollar Value ($ mil)
GIC/stable value funds 69% $282
Money market funds 17% $70
Bond funds 13% $52


Asset Classes with Most Trading Outflows in September

Percent of Outflows Index Dollar Value ($ mil)
Target-date funds2 41% $166
Large U.S. equity funds 23% $92
Company Stock 17% $70


Asset Classes with Most Contributions in September

Percent of Contributions Index Dollar Value ($ mil)
Target-date funds 40% $346
Large U.S. equity funds 19% $165


Asset Classes with Largest Percentage of Total Balance at end of September

Percent of Balance Index Dollar Value ($ mil)
Target-date funds 23% $36,837
Large U.S. equity funds 22% $34,903
GIC/stable value funds 14% $21,846

Third Quarter 2015 Review

September’s activity was a continuation of themes from July and August. For the quarter ending September 30, net trading activity saw participants overwhelming favor fixed income funds over equity instruments. The majority of outflows came from target-date funds.


Asset Classes with Most Trading Inflows in Q3 2015

Percent of Inflows Index Dollar Value ($ mil)
GIC/stable value funds 65% $623
Money market funds 22% $207
Bond funds 8% $80

Asset Classes with Most Trading Outflows in Q3 2015

Percent of Outflows Index Dollar Value ($ mil)
Target-date funds 62% $596
Company Stock 13% $124


Market Observations

In general, market returns were negative for the month of September and the third quarter: U.S. Small-Cap equities (represented by the Russell 2000 Index), U.S. Large-Cap equities (represented by the S&P 500 Index), and International equities (represented by the MSCI ACWI ex-US Index) all declined while U.S. Fixed Income (represented by the Barclays Aggregate Index) gained slightly.


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


Index Statistics

September 2015 Q3 2015 YTD
Total Transfers as Percent of Starting Balance 0.25% 0.59% 1.18%
Number of Fixed Income Days 17 (81%) 39 (61%) 98 (53%)
Number of Equity Days 4 (19%) 25 (39%) 86 (47%)
Number of Above-Normal1 Days 4 6 32


Indices Returns

September 2015 Q3 2015 YTD
Barclays Capital U.S. Aggregate Bond Index 0.7% 1.2% 1.1%
S&P 500 -2.5% -6.4% -5.3%
Russell 2000 Index -4.9% -11.9% -7.7%
MSCI All Country World ex-U.S. Index (net) -4.6% -12.2% -8.6%

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.