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

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

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.



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