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

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


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Market Commentary

  • Defined contribution plan participants transferred 0.025% of total daily balances during December, according to the Aon Hewitt 401(k) Index™. This is slightly above November’s average, at 0.024%, and below the 12-month daily average of 0.029%. December had two days with transfer activity above normal* levels, which was the same as November.
  • The U.S. equity markets continued to increase in December, as the S&P 500 Index gained 2.5% during the month. Non-U.S. equities also ended the year on a positive note, with the MSCI All-Country World ex-U.S. Index returning 0.9% during December. The fixed income markets, as measured by the Barclays U.S. Aggregate Index, declined by 0.6% during month.
  • Net transfer activity for December continued to favor diversified equities (equity assets excluding company stock) with $332 million (0.21%) flowing in. Total net activity across the Aon Hewitt 401(k) Index™ came in with $359 million (0.23%) transferring for the month. Transfer activity trends were generally consistent throughout the fourth quarter.
  • Net outflow activity in December was led by company stock funds with $182 million (51%), bond funds with $83 million (23%), and GIC/stable value funds with $82 million (23%) transferring out.
  • Among the asset classes with net inflows during December, large U.S. funds gained the most, receiving $160 million (45%) of flows. Additionally, international funds had $121 million (34%), while both small and mid U.S. equity funds each received about $26 million (7%) of the monthly inflows.
  • On average, participants’ overall equity allocation increased to 65.2% at the end of December, up from 64.6% in November.
  • The percentage of employee discretionary contributions allocated to equities slightly decreased from the high in November (now 64.1%, down from 65.2%).

The following tables show Aon Hewitt 401(k) Index™ statistics and the returns of major market indices for periods ending December 31, 2012.

Index Returns

December Q4
Barclays Capital Aggregate Bond Index -0.6% -0.1%
S&P 500 2.5% 10.5%
Russell 2000 Index 2.0% 8.7%
MSCI All Country World ex-U.S. Index (net) 0.9% 4.8%

Index Statistics

December Q4
Average Daily Net Activity 0.025% 0.028%
Number of Fixed Income Days 6 (30%) 24 (37%)
Number of Equity Days 14 (70%) 40 (63%)
Number of Above Normal Days 2 10

*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