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

401(k) Index & Observations Monthly Details: August 2013


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Market Commentary

  • Defined contribution plan participants’ daily transfer volumes were low in August, with transfers averaging 0.022% of balance totals per day, according to the Aon Hewitt 401(k) Index™. The trailing 12-month daily average remains at 0.028%, and August had zero days with transfer activity reaching above-normal* levels. Since the end of June, daily activity has dropped off significantly in comparison with the first half of the year.
  • August proved to be a difficult month for global equity and fixed income investors. Tapering comments from members of the Federal Reserve and the announcement of possible U.S. military strikes against Syria sent most major capital market indices lower for the month. Losses ranged from the Barclays Capital Aggregate Bond Index (-0.51%) to the Russell 2000 Index (-3.2%).
  • Daily trading favored fixed income investment vehicles during August, which experienced net gains from transfer activity for over half (59%) of the trading days.
  • Net transfer activity for August moved away from diversified equities (equity assets excluding company stock) by $34 million (0.02%). Total transfer activity across the Index was $377 million for the month.
  • Outflow activity was led by bond funds, with $191 million (51%) of negative flows. Premixed funds also decreased significantly, by $108 million (29%). Large U.S. funds were also down by $35 million (9%) due to flows.
  • Net inflows for August were led by GIC/stable value funds, which received $219 million (58%) of the flows. Money market funds received $51 million (14%), and international funds received $43 million (11%).
  • Employee discretionary contributions, another measure of participant sentiment, decreased to 64.3% in equities for August, down from 64.8% in July.
  • By the end of August, participants’ overall equity allocations averaged 62.8%, down from 63.3%. The decrease was due primarily to the slide in the markets.

The following tables show Aon Hewitt 401(k) Index™ statistics and the returns of major market indices for periods ending August 31, 2013.

Index Returns

August 2013 YTD
Barclays Capital Aggregate Bond Index -0.51% -2.81%
S&P 500 -2.90% 16.15%
Dow Jones Industrial Average -4.11% 15.02%
Russell 2000 Index -3.18% 20.03%
NASDAQ Index -0.82% 19.96%
MSCI EAFE Index -1.32% 8.15%
MSCI Emerging Markets Index (Net) -1.72% -10.19%

Index Statistics

August 2013 YTD
Average Daily Net Activity 0.022% 0.030%
Number of Fixed Income Days 13 (59%) 77 (46%)
Number of Equity Days 9 (41%) 91 (54%)
Number of Above Normal Days 0 34

*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