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