Created in 1997, the Aon Hewitt 401(k) Index is the only index of its kind, serving as a barometer of daily 401(k) investment activity of employees at large U.S. companies.
The Index tracks the daily transfer activity of nearly 1.3 million 401(k) plan participants with over $150 billion in collective assets.
It reports the flow of money into and out of 13 asset classes and relates the data to daily stock market activity, providing a glimpse into how specific world and market events, such as a stock market dip, affect 401(k) plan participants' degree of confidence in the market and their investment decisions.
How to Interpret the Aon Hewitt 401(k) Index
The Index shows the daily level of dollar transfer activity above or below a one-year rolling average on each business day.
An "average" level of transfer activity is equal to an Index reading of 1.0. Readings higher than 1.0 indicate heavier trading than usual, while readings less than 1.0 indicate lower than average trading activity.
Each daily Aon Hewitt 401(k) Index reading includes one of two directional indicators. An "eq" indicates that the majority of money on that day flowed out of fixed income funds and into equity funds. An "fi" shows that the majority of money transferred that day flowed out of equity funds and into fixed income funds.
For example, on January 20, 2016, the Aon Hewitt 401(k) Index showed a reading of 2.23, indicating that transfer activity was more than double the daily average. The directional indicator for January 20 is "fi" indicating that the majority of money that day flowed out of equity funds and into fixed income funds.
In general, 401(k) participants appear to be taking a long-term investment strategy for their 401(k) retirement assets by choosing an asset allocation and sticking with it.
Net transfer activity is generally very modest. To date, approximately 0.04 percent of balances transfer per day on a net basis.
For the most recent monthly observations, click here.
How the Aon Hewitt 401(k) Index is Recorded
Aon Hewitt creates the 401(k) Index by capturing the investment activity of a benchmark portion of its 401(k) outsourcing clients, selected as a representative sample of large employers by industry, plan design, and investment offerings. For more detailed information, click here.
The Aon Hewitt 401(k) Index on Hewitt.com
Hewitt.com visitors can access monthly summaries of 401(k) asset allocation, new contributions, and detailed transfer activity.
Monthly Details: Aon Hewitt 401(k) Index™ Observations