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

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

October 2016 Review

October was another light month of trading for 401(k) investors. According to the Aon Hewitt 401(k) IndexTM, only 0.16% of total balances traded in the month and there were two days of above-normal1 trading activity. When participants made trades, 15 out of 21 trading days favored fixed income funds over equity funds.


Asset Classes with Most Trading Inflows in October

Percent of Inflows Index Dollar Value ($ mil)
GIC/Stable value funds 36% $98
International funds 23% $62
Money market funds 20% $54


Asset Classes with Most Trading Outflows in October

Percent of Outflows Index Dollar Value ($ mil)
Company stock funds 42% $115
Large U.S. equity funds 23% $63
Mid U.S. equity funds 20% $54

After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities decreased to 64.4% from 64.9% in September. New contributions continue to favor stocks, with 65.7% of employee contributions investing in equities—unchanged from September.


Asset Classes with Most Contributions in October

Percent of Contributions Index Dollar Value ($ mil)
Target-date2 funds 42% $356
Large U.S. equity funds 19% $162

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

Percent of Balance Index Dollar Value ($ mil)
Target-date2 funds 24% $40,869
Large U.S. equity funds 22% $37,549
GIC/stable value funds 13% $22,664

The following table shows Aon Hewitt 401(k) IndexTM statistics for the period ending October 31, 2016:

Index Statistics

October 2016 YTD
Total Transfers as Percent of Starting Balance 0.16% 2.06%
# of Fixed Income Days 15 (71%) 151 (72%)
# of Equity Days 6 (29%) 59 (28%)
# of Above-Normal1 Days 2 20


Market Observations

October was a difficult month for investors as equity and fixed income returns were generally negative. U.S. Small-Cap equities (represented by the Russell 2000 Index) fell close to -5%, while U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) fell close to -1%. U.S. Large-Cap equities (represented by the S&P 500 Index) fell close to -2% and International equities (represented by the MSCI All Country World ex-USA Index) fell approximately -1.5%.

The following tables show the returns of major market indices for periods ending October 31, 2016:


Indices Returns

October 2016 YTD
Barclays Capital U.S. Aggregate Bond Index -0.8% 5.0%
S&P 500 Index -1.8% 5.9%
Russell 2000 Index -4.8% 6.2%
MSCI All Country World ex-U.S. Index (net) -1.4% 4.3%

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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