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401(k) Index &  Observations Monthly Details: April 2013 | Aon

401(k) Index & Observations Monthly Details: April 2013 | Aon


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Market Commentary
  • After an active start to the year, defined contribution plan participants’ daily transfer volumes continue to decline since January—to 0.024% of balances per day in April, according to the Aon Hewitt 401(k) Index™. The trailing 12-month average remains at 0.025%, while the 2013 average through April is 0.030%. There were three days in April with transfer activity above normal*, which remains the same as March.
  • Participants who transferred had a preference for fixed-income investments during April. The total net transfer activity reflects 59% in fixed income, up from 35% in March.
  • Despite the disappointing U.S. March employment report, gold officially entering bear market territory, and China’s GDP growth rate coming in lower than expected, global equity indices continued higher during April—due, in large part, to positive earnings from multi-national companies like Boeing, Goldman Sachs, and Google. The S&P 500, MSCI EAFE, and MSCI Emerging Markets Indices all ended in positive territory for the month of April, as did the Barclays Aggregate Index.
  • In April, total net transfer activity was low, totaling $200 million or 0.14% of total participant balances. This amount is less than the March total of $345 million and significantly less than both January and February ($930 million and $431 million, respectively).
  • Participants who transferred had a preference for fixed-income investments during April. The net aggregate shows 59% of transfers were to fixed income, up from 35% in March.
  • Total transfers into diversified equities (equity excluding company stock) asset classes totaled a negligible $26 million of total flows or 0.02% of total assets. However, when company stock is included, the transfers total nets $52 million (0.04%) away from equities.
  • Total net outflows in April were concentrated among several asset classes: company stock funds, losing $78 million (39%); small U.S. equities, losing $46 million (23%); and bond funds, which lost $36 million (18%). Additionally, emerging market funds lost $32 million (16%) from negative flows.
  • April’s inflows went largely to premixed funds which gained $83 million (41%). Both money market funds and specialty/sector funds received approximately $33 million (17%) each. Mid U.S. equities also received $18 million (9%) of the flows.
  • Employee discretionary contributions, another measure of participant sentiment, shows participants continued to increase their equity allocations—64.3% of new employee contributions went into equities during April. This is the highest rate reported by the Aon Hewitt 401(k) Index™ since before the market collapse in 2008
  • By the end of April, participants’ overall equity allocation increased to 61.9%, from 61.8% at the end of March.

The following tables show Aon Hewitt 401(k) Index™ statistics and the returns of major market indices for periods ending April 30, 2013.

Index Returns

April 2013 YTD
Barclays Capital Aggregate Bond Index 1.01% 0.89%
S&P 500 1.93% 12.74%
Dow Jones Industrial Average 1.94% 14.09%
Russell 2000 Index -0.37% 11.98%
NASDAQ Index 1.93% 10.61%
MSCI EAFE Index 5.21% 10.61%
MSCI Emerging Markets Index (Net) 0.75% -0.88%

Index Statistics

April 2013 YTD
Average Daily Net Activity 0.024% 0.030%
Number of Fixed Income Days 13 (59%) 34 (41%)
Number of Equity Days 9 (41%) 48 (59%)
Number of Above Normal Days 3 16

*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.

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