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

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


November 2016 Review

According to the Aon Hewitt 401(k) IndexTM, November was a busy month for investors in defined contribution plans. On average, 0.035% of balances traded each day—the highest level since January 2013.

In the days leading up to the U.S. Presidential election, trading activity was above-normal1 with trades moving money from equities to fixed income. After the election, once markets calmed from the immediate volatility, the second half of the month saw investors trading into equities, though at a slower pace than at the beginning of the month.

Other key November observations

  • There were eight above-normal trading days in the month, the highest since May 2015
  • The net trading activity on November 9th (the day immediately after the election) was 0.10% of balances—about 4 ½ times the normal trading level and easily the highest trading day of 2016 and among the highest in recent history

Asset Classes with Most Trading Inflows in November

Percent of Inflows Index Dollar Value ($ mil)
GIC/Stable value funds 50% $255
Money market funds 20% $100
Small U.S. equity funds 11% $56

Asset Classes with Most Trading Outflows in November

Percent of Outflows Index Dollar Value ($ mil)
Company stock funds 73% $370
Bond funds 15% $74
Specialty/Sector funds 7% $38

After combining contributions, trades, and market activity in participants’ accounts, the percentage of balances in equities at the end of November increased slightly to 65.0% from 64.4% at the end of October. New contributions are unchanged from the previous two months, with 65.7% of employee contributions investing in equities.

Asset Classes with Most Contributions in November

Percent of Contributions Index Dollar Value ($ mil)
Target-date2 funds 43% $352
Large U.S. equity funds 19% $157

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

Percent of Balance Index Dollar Value ($ mil)
Target-date2 funds 24% $39,970
Large U.S. equity funds 23% $38,820
GIC/stable value funds 13% $22,824

The following table shows Aon Hewitt 401(k) IndexTM statistics for the period ending November 30, 2016:

Index Statistics

November 2016 YTD
Total Transfers as Percent of Starting Balance 0.30% 2.22%
# of Fixed Income Days 9 (43%) 160 (69%)
# of Equity Days 12 (57%) 71 (31%)
# of Above-Normal1 Days 8 28

Market Observations

November was a volatile month for the markets. In the U.S., equities began the month down and then rallied. U.S. Large-Cap equities (represented by the S&P 500 Index) increased nearly 4% while U.S. Small-Cap equities (represented by the Russell 2000 Index) increased by over 11%. While U.S. equities surged, it was generally a down month for fixed income and International equities. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) fell by over 2% and International equities (represented by the MSCI All Country World ex-USA Index) also fell by over 2%.

The following tables show the returns of major market indices for periods ending November 30, 2016:

Indices Returns

November 2016 YTD
Barclays Capital U.S. Aggregate Bond Index -2.4% 2.5%
S&P 500 Index 3.7% 9.8%
Russell 2000 Index 11.2% 18.0%
MSCI All Country World ex-U.S. Index (net) -2.3% 1.9%

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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