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401(k) Index &  Observations Monthly Details: August 2016

401(k) Index & Observations Monthly Details: August 2016


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August 2016 Review

Trading in defined contribution plans in August was amongst the lowest on record, according to the Aon Hewitt 401(k) IndexTM. Just 0.11% of total balances traded in the month—the second lowest monthly total ever (0.10% in April 2012). No days in August had above-normal1 trading activity. The average daily trading activity for the month was 0.013%, the lowest monthly level since Aon Hewitt began tracking trading activity in 1997.


Asset Classes with Most Trading Inflows in August

Percent of Inflows Index Dollar Value ($ mil)
Bond funds 44% $86
GIC/stable value funds 22% $42
Emerging markets funds 13% $26


Asset Classes with Most Trading Outflows in August

Percent of Outflows Index Dollar Value ($ mil)
Company stock funds 43% $83
Large U.S. equity funds 31% $61
Small U.S. equity funds 8% $15

After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities at the end of August was 64.9% a decrease from 65.8% in July. New contributions continue to favor stocks, with 65.6% of employee contributions investing in equities—a slight decrease from 65.7% in July.


Asset Classes with Most Contributions in August

Percent of Contributions Index Dollar Value ($ mil)
Target-date2 funds 41% $343
Large U.S. equity funds 19% $162

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

Percent of Balance Index Dollar Value ($ mil)
Target-date2 funds 24% $41,266
Large U.S. equity funds 22% $38,525
GIC/stable value funds 13% $22,571

Market Observations

August was a good month for investors U.S. Large-Cap equities (represented by the S&P 500 Index), U.S. Small-Cap equities (represented by the Russell 2000 Index), and International equities (represented by the MSCI All Country World ex-USA Index) all posting positive returns. U.S. bonds (represented by the Barclays Capital U.S. Aggregate Bond Index) posted slightly negative returns. The following tables show Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending August 31, 2016:


Index Statistics

August 2016 YTD
Total Transfers as Percent of Starting Balance 0.11% 1.79%
Number of Fixed Income Days 12 (55%) 119 (71%)
Number of Equity Days 10 (45%) 48 (29%)
Number of Above-Normal1 Days 4 17


Indices Returns

August 2016 YTD
Barclays Capital U.S. Aggregate Bond Index -0.1% 5.9%
S&P 500 Index 0.1% 7.8%
Russell 2000 Index 1.8% 10.2%
MSCI All Country World ex-U.S. Index (net) 0.6% 4.5%

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) 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.



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