401(k) Index & Observations Monthly Details: September 2016
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September 2016 Review
According to the Aon Hewitt 401(k) IndexTM, September was another light month of trading for 401(k) investors with 0.14% of total balances traded in the month and one day of above-normal1 trading activity. When participants made trades, they favored fixed income funds over equity funds.
Asset Classes with Most Trading Inflows in September
|
Percent of Inflows |
Index Dollar Value ($ mil) |
| GIC/Stable value funds |
51% |
$121 |
| Money market funds |
27% |
$65 |
| Bond funds |
11% |
$27 |
Asset Classes with Most Trading Outflows in September
|
Percent of Outflows |
Index Dollar Value ($ mil) |
| Company stock funds |
41% |
$99 |
| Large U.S. equity funds |
36% |
$88 |
| Target-date2 funds |
10% |
$24 |
After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities remained unchanged from August at 64.9%. New contributions continue to favor stocks, with 65.7% of employee contributions investing in equities—a slight increase from 65.6% in August.
Asset Classes with Most Contributions in September
|
Percent of Contributions |
Index Dollar Value ($ mil) |
| Target-date2 funds |
42% |
$421 |
| Large U.S. equity funds |
19% |
$192 |
Asset Classes with Largest Percentage of Total Balance at end of September
|
Percent of Balance |
Index Dollar Value ($ mil) |
| Target-date2 funds |
24% |
$41,243 |
| Large U.S. equity funds |
22% |
$38,229 |
| GIC/stable value funds |
13% |
$22,455 |
Third Quarter 2016 Review
The third quarter saw ebbs and flows in trading activity for 401(k) investors. The quarter began with high trading activity driven by market volatility in the wake of the Brexit vote. August was one of the lightest trading months on record while September saw more of a return to normal activity.
Trades in the third quarter generally favored fixed income over equities with GIC/stable value, bond, and money market funds receiving the majority of the inflows and large U.S. equity funds, company stock, and small U.S. equity funds having the most outflows.
Asset Classes with Most Trading Inflows in Q3 2016
|
Percent of Inflows |
Index Dollar Value ($ mil) |
| GIC/Stable value funds |
44% |
$459 |
| Bond funds |
30% |
$312 |
| Money market funds |
19% |
$197 |
Asset Classes with Most Trading Outflows in Q3 2016
|
Percent of Outflows |
Index Dollar Value ($ mil) |
| Large U.S. equity funds |
38% |
$400 |
| Company Stock |
36% |
$376 |
| Small U.S. equity funds |
7% |
$76 |
Market Observations
September was a relatively good month for investors as U.S. Small-Cap equities (represented by the Russell 2000 Index) and International equities (represented by the MSCI All Country World ex-USA Index) posted positive returns. U.S. Large-Cap equities (represented by the S&P 500 Index) returns were flat. U.S. bonds (represented by the Barclays Capital U.S. Aggregate Bond Index) posted slightly negative returns. Third quarter returns for nearly all indices were strong. The following tables show Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending September 30, 2016:
Index Statistics
|
September |
Q3 2016 |
2016 YTD |
| Total Transfers as Percent of Starting Balance |
0.14% |
0.62% |
1.79% |
| Number of Fixed Income Days |
16 (76%) |
47 (74%) |
136 (72%) |
| Number of Equity Days |
5 (24%) |
17 (26%) |
53 (28%) |
| Number of Above-Normal1 Days |
1 |
5 |
18 |
Indices Returns
|
September |
Q3 2016 |
2016 YTD |
| Barclays Capital U.S. Aggregate Bond Index |
-0.1% |
0.5% |
5.8% |
| S&P 500 Index |
0.0% |
3.9% |
7.8% |
| Russell 2000 Index |
1.1% |
9.1% |
11.5% |
| MSCI All Country World ex-U.S. Index (net) |
1.2% |
6.9% |
5.8% |
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.