Human Resources
401(k) Index &  Observations Monthly Details: May 2014 | Aon

401(k) Index & Observations Monthly Details: May 2014


Loading

Market Commentary

  • Defined contribution plan participants bucked the old stock market adage to “sell in May and stay away” and continued with another light trading month in May, according to Aon Hewitt’s 401(k) Index™. The average daily transfer volume was 0.024% of balances, identical to April’s value, and well below historical levels. May marked the seventh consecutive month that trading activity was below 0.03%. Typically, the average monthly trading activity has been close to 0.05% since Aon Hewitt began tracking this data in 1997. Total transfer activity across the Index was $396 million (0.25%) with one day in May with above normal* activity.
  • When trading occurred, defined contribution plan participants favored fixed income funds for 62% of trading days in May down from 67% in April. Overall, net transfer activity moved away from diversified equities (equity assets excluding company stock) by $62 million (0.04%).
  • Bond funds received the most inflows in May with $151 million (38%), followed by international funds with gains of $88 million (22%), and premixed funds with $75 million (19%). Most equity-based asset classes had net outflows in May. Leading the way, small U.S. equity funds lost $159 million (40%), followed by company stock $105 million (27%), and mid-U.S. equity funds $81 million (21%) transferring out.
  • On average, participants’ overall equity allocation remained the same as the previous month at 65.4%. Employee contributions to equities remained unchanged as well at 66.6%.
  • The global equity markets continued their upward trend during the month of May. They were led by the emerging equity markets as the MSCI Emerging Markets Index gained 3.5% during the month. U.S. equities, as measured by the S&P 500, returned 2.3% while non-U.S. Equities, as measured by the MSCI All Country World ex-U.S. Index, returned 2.0%. The Barclays U.S. Aggregate Index posted its second positive month in a row, returning 1.1% during May as the 10-year Treasury yield decreased to 2.48%.

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

Index Returns

May Q1 2014 YTD
Barclays Capital Aggregate Bond Index -0.2% 1.8% 1.8%
S&P 500 0.8% 1.8% 1.8%
Russell 2000 Index -0.7% 1.1% 1.1%
MSCI All Country World ex-U.S. Index (net) 0.3% 0.5% 0.5%

Index Statistics

May 2014 YTD
Average Daily Net Activity 0.024% 0.024%
Number of Fixed Income Days 13 (62%) 56 (54%)
Number of Equity Days 8 (38%) 47 (46%)
Number of Above Normal Days 1 8

*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