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

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


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June 2016 Review

A volatile time on Wall Street at the end of June saw investors making trades, according to the Aon Hewitt 401(k) IndexTM. Despite a slow start to the month,there were three days of above-normal1 trading activity—mostly coming after the Brexit news caused a swing in the equity market. Overall, a total of 0.19% of balances traded in June with 18 out of the 22 days favoring inflows to fixed income instruments.

Asset Classes with Most Trading Inflows in June

Percent of Inflows Index Dollar Value ($ mil)
GIC/stable value funds 42% $138
Bond funds 36% $118
Money markets funds 16% $51

Asset Classes with Most Trading Outflows in June

Percent of Outflows Index Dollar Value ($ mil)
Company stock funds 36% $117
Target-date2 funds 22% $72
Large U.S. equity funds 14% $47

After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities at the end of June was 64.6% a slight decline from 64.8% in May. New contributions continue to favor stocks, with 65.6% of employee contributions invested in equities—a decrease from 65.7% in May.

Asset Classes with Most Contributions in June

Percent of Contributions Index Dollar Value ($ mil)
Target-date2 funds 41% $396
Large U.S. equity funds 19% $189

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

Percent of Balance Index Dollar Value ($ mil)
Target-date funds 24% $39,790
Large U.S. equity funds 22% $37,371
GIC/stable value funds 13% $22,074

Second Quarter 2016 Review

The second quarter came to a close on Wall Street with investors favoring fixed income funds over equities. As a percentage of balances, 0.50% of balances traded in the second quarter of 2016, which is lower than the 0.82% percentage of balances traded in the first quarter of 2016.

Trading activity favored fixed income over equities. Bond, GIC/stable value and money market funds received the majority of the inflows. Large U.S. equity funds, company stock, and target-date funds had the largest percentage of outflows.

Asset Classes with Most Trading Inflows in Q2 2016

Percent of Inflows Index Dollar Value ($ mil)
Bond funds 45% $369
GIC/stable value funds funds 38% $311
Money market funds 14% $114

Asset Classes with Most Trading Outflows in Q2 2016

Percent of Outflows Index Dollar Value ($ mil)
Large U.S. equity funds 32% $265
Company Stock 24% $195
Target-date funds 12% $102
International funds 12% $100

Market Observations

  • For the month, U.S. bonds (represented by the Barclays Capital U.S. Aggregate Bond Index) and U.S. Large-Cap equities (represented by the S&P 500 Index) had positive returns. U.S. Small-Cap equities (represented by the Russell 2000 Index) and International equities (represented by the MSCI All Country World ex-USA Index) had negative returns.
  • In the second quarter of 2016, 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), and U.S. Small-Cap equities (represented by the Russell 2000 Index) had positive returns. International equities (represented by the MSCI All Country World ex-USA Index) had negative returns.

Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending June 30, 2016:

Index Statistics

June Q2 2016 2016 YTD
Total Transfers as Percent of Starting Balance 0.19% 0.50% 1.31%
Number of Fixed Income Days 18 (82%) 44 (69%) 89 (71%)
Number of Equity Days 4 (18%) 20 (31%) 36 (29%)
Number of Above-Normal1 Days 3 5 13

Indices Returns

June Q2 2016 2016 YTD
Barclays Capital U.S. Aggregate Bond Index 1.8% 2.2% 5.3%
S&P 500 Index 0.3% 2.5% 3.8%
Russell 2000 Index -0.1% 3.8% 2.2%
MSCI All Country World ex-U.S. Index (net) -1.5% -0.6% -1.0%

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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