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

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


Loading

July 2016 Index Comments

As the stock market was climbing in July, 401(k) participants were in profit-taking mode according to the Aon Hewitt 401(k) Index TM . July saw 18 of the 20 trading days favoring inflows to fixed income funds and 90% of the net trading dollars going from equities to fixed income. Four days had above-normal1 trading activity.

Asset Classes with Most Trading Inflows in July

Percent of Inflows Index Dollar Value ($ mil)
GIC/stable value funds 46% $295
Bond funds 31% $198
Money markets funds 17% $112

Asset Classes with Most Trading Outflows in July

Percent of Outflows Index Dollar Value ($ mil)
Large U.S. equity funds 38% $246
Company stock funds 29% $191
Small U.S. equity funds 10% $65

After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities at the end of July was 65.8%, an increase from 64.6% in June. New contributions continue to favor stocks, with 65.7% of employee contributions investing in equities—a slight increase from 65.5% in June.

Asset Classes with Most Contributions in July

Percent of Contributions Index Dollar Value ($ mil)
Target-date2 funds 42% $406
Large U.S. equity funds 19% $190

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

Percent of Balance Index Dollar Value ($ mil)
Target-date funds 23% $41,093
Large U.S. equity funds 22% $38,391
GIC/stable value funds 13% $22,461

Market Observations

July was a good month for investors with U.S. bonds (represented by the Barclays Capital U.S. Aggregate Bond Index), 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.

The following tables show Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending July 31, 2016:

Index Statistics

July 2016 YTD
Total Transfers as Percent of Starting Balance 0.39% 1.69%
Number of Fixed Income Days 18 (90%) 107 (74%)
Number of Equity Days 2 (10%) 38 (26%)
Number of Above-Normal1 Days 4 17

Indices Returns

July 2016 YTD
Barclays Capital U.S. Aggregate Bond Index 0.6% 6.0%
S&P 500 Index 3.7% 7.7%
Russell 2000 Index 6.0% 8.3%
MSCI All Country World ex-U.S. Index (net) 5.0% 3.9%

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.



If you elect to comment or engage with our content via third-party social media websites, you authorize Aon to have access to certain social media profile information. Please click here to learn more about information that may be collected when using these tools on Aon.com