Human Resources
401(k) Index &  Observations Monthly Details: January 2016

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

January 2016 Review

As stocks tumbled in January, 401(k) plan participants were busy making trades, according to the Aon Hewitt 401(k) IndexTM. January had six days of above-normal1 trading activity and saw 0.39% of balances traded in the month—well above December’s value of 0.14% and the highest level since January 2013.

Participants’ heavily favored fixed income over equities when they made trades with 82 cents of every dollar traded going from an equity instrument to a fixed income fund. Additionally, 14 out of 19 (74%) of the trading days showed more inflows to fixed income.

After reflecting contributions, trades, and market activity in participants’ accounts, the percentage in equities decreased to 64.1% at the end of January, down from 65.4% at the end of December. Despite the movement of current balances to more conservative investments, participants were still keen on investing new money in stocks as contributions to equities increased to 66.3% from 63.7% in December.


Asset Classes with Most Trading Inflows in January

Percent of Inflows Index Dollar Value ($ mil)
GIC/stable value funds 54% $348
Bond funds 27% $172
Money markets funds 17% $106


Asset Classes with Most Trading Outflows in January

Percent of Outflows Index Dollar Value ($ mil)
Target-date2 funds 39% $251
Large U.S. equity funds 22% $145
Small U.S. equity funds 9% $58


Asset Classes with Most Contributions in January

Percent of Contributions Index Dollar Value ($ mil)
Target-date funds 41% $514
Large U.S. equity funds 18% $228


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

Percent of Balance Index Dollar Value ($ mil)
Target-date funds 23% $36,497
Large U.S. equity funds 22% $34,902
GIC/stable value funds 14% $21,772

Market Observations

Most January market returns declined:

  • 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) had negative returns.
  • Bond index funds (represented by the Barclays Capital U.S. Aggregate Bond Index) had positive returns.

Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending January 31, 2016:


Index Statistics

January 2016 YTD
Total Transfers as Percent of Starting Balance 0.39% 0.39%
Number of Fixed Income Days 14 (74%) 14 (74%)
Number of Equity Days 5 (26%) 5 (26%)
Number of Above-Normal* Days 6 6


Indices Returns

January 2016 YTD
Barclays Capital U.S. Aggregate Bond Index 1.4% 1.4%
S&P 500 Index -5.0% -5.0%
Russell 2000 Index -8.8% -8.8%
MSCI All Country World ex-U.S. Index (net) -6.8% -6.8%

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.