Human Resources

401(k) Index & Observations Monthly Details: March 2012

Market Commentary

  • Transfer activity in March was low, with just 0.024% of total defined contribution plan balances transferring daily, on average, according to the Aon Hewitt 401(k)Indextm. In comparison, the daily average has been 0.032% of total balances over the past 12 months. Matching the trend set in both January and February, the activity during March was the lowest on record since 1997. Identical to February, only one day in March saw transfer volume exceed normal levels.
  • The net direction of transfers during the month was toward equities, despite 55% of days favoring fixed income investments. Overall, $151 million transferred into diversified equities (equities excluding employer stock) from fixed income investments. The outflows from company stock did not offset the net transfer amount by much ($39 million), allowing the net transfer movement for the month to record a noteworthy $112 million away from fixed income. The total transfer amount was $219 million within the Index for March, about a third less than both January and February.
  • GIC/stable value funds accounted for 44% ($95 million) of the outflows, followed by Bond assets at 30% ($66 million). Company stock had 18% ($39 million) of outflows, and the small U.S. equity asset class accounted for the remaining 8% ($17 million).
  • The largest inflow amounts went into lifestyle/pre-mixed funds and large U.S. equity funds, which received 41% ($90 million) and 40% ($88 million) of inflows, respectively. Participants also moved 6% ($12 million) of net inflows into self-directed brokerage window funds.
  • As domestic markets continued to rally, employee discretionary contribution rates moved almost a full percentage point toward stocks, with the overall allocation directed to equity funds now averaging 62.6% in March, up from 61.7% in February. The equity allocation rates rose almost 3% through the first quarter.
  • The total asset allocation of equity asset classes continued to rise in March—not surprising with the increased equity contributions and market movement. Equities now hold 60.6% of total assets, which is a 0.4% increase for the month.

The following tables show Hewitt 401(k) Index statistics and the returns of major market indices for the month of March 2012:

Index Returns

Dow Jones Industrial Average 2.15%
Russell 2000 2.56%
Barclays Capital Aggregate Bond Index -0.55%
S&P 500 3.29%
MSCI EAFE -0.46%
NASDAQ 4.20%
MSCI Emerging Markets Index (Net) -3.33%

Index Statistics

Number of Fixed Income Days 12
Number of Equity Days 10
Percent of Equity Days 45%

*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) Index™ 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 two times the average daily net activity of the preceding 12 months.

Index Data Reports

Relative Transfer Activity (March 2012)

Asset Allocation - Supporting Data (March 2012)

Balances in Stock Investments (March 2012)

Monthly Details: Aon Hewitt 401(k) Index™ Observations