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401(k) Index &  Observations Monthly Details: April 2014 | Aon

Aon Hewitt 401(k) Index™ Observations Monthly Details: April 2014


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Market Commentary

  • According to Aon Hewitt’s 401(k) Index™, defined contribution plan participants had a relatively light trading month in April with an average daily transfer volume of 0.024% of balances. While this value is slightly higher than March’s value of 0.021%, it is well below historical levels. Since Aon Hewitt began tracking this data in 1997, average monthly trading activity has been close to 0.05%, but April marked the sixth consecutive month that trading activity was below 0.03%. Total transfer activity across the Index was $349 million (0.22%) with two days in April with above normal* activity.
  • When trading occurred, defined contribution plan participants favored fixed income funds for 67% of trading days in April up from 57% in March. Overall, net transfer activity moved away from diversified equities (equity assets excluding company stock) by $49 million (0.03%).
  • In April, the asset classes that experienced net inflows included bond funds with gains of $120 million (34%) and international funds with a gain of $111 million (32%). Next in line were large U.S. equity funds and specialty/sector funds both with $35 million (10%) of the monthly inflows. Company stock funds again lead the net outflow activity with $203 million (58%) transferring out, followed by small and mid U.S. equity funds with $74 million (21%) and $57 million (16%), respectively transferring out.
  • On average, participants’ overall equity allocation remained at 65.4% at the end of April, virtually unchanged from the March value of 65.5%. Employee contributions to equities, declined slightly from 66.6% in March to 66.1% in April.
  • U.S. equities, as measured by the S&P 500 started the second quarter of the year out on a positive note, returning 0.7% during April. Non-U.S. equities also posted gains during the month. The MSCI All Country World ex-U.S. Index returned 1.4% during April. Although they underperformed the developed markets, emerging markets also increased during April, gaining 0.4% during the period. The fixed income market rebounded from a poor March, returning 0.8% in April, as the 10-year Treasury yield decreased slightly to 2.65%.

The following tables show Aon Hewitt 401(k) Index™ statistics and the returns of major market indices for periods ending April 30, 2014.

Index Returns

April Q1 2014 YTD
Barclays Capital Aggregate Bond Index 0.8% 1.8% 2.7%
S&P 500 0.7% 1.8% 2.6%
Russell 2000 Index -3.9% 1.1% -2.8%
MSCI All Country World ex-U.S. Index (net) 1.3% 0.5% 1.8%

Index Statistics

April 2014 YTD
Average Daily Net Activity 0.024% 0.024%
Number of Fixed Income Days 14 (67%) 43 (52%)
Number of Equity Days 7 (33%) 39 (48%)
Number of Above Normal Days 2 7

*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