What is the Aon Hewitt 401(k) Index?
The Aon Hewitt 401(k) Index is the first and only index of its kind to track the market confidence level and investment activity of 401(k) participants at large corporations exclusively. Based on data collected daily from 1.3 million 401(k) participants with nearly $140 billion in collective assets, the Aon Hewitt Index tracks the daily transfer activity among 13 asset classes (including self-directed window) relative to an average of previous transfer activity as well as stock market activity. The result is a glimpse into how specific market events affect
How does Aon Hewitt create the Aon Hewitt
Aon Hewitt creates the Aon Hewitt
(1) First, Aon Hewitt computes the total amount of money moved by participants between 13 asset classes on a daily basis (activity level). In this process, we count the dollars moving between asset classes only once (dollars are counted moving into and out of self-directed window; but transfers within self-directed window are not counted). Each of these amounts is then restated as a percent of the total dollars (the day’s beginning balance) in all 13 asset classes.
(2) Next, Aon Hewitt computes an average of these daily numbers for the last 12 months, starting on August 1, 1997 and up to the day before the index is computed. This average represents "normal" activity and is computed on a rolling basis, changing daily as the Index moves forward.
(3) The Aon Hewitt Index represents the ratio of transfer activity on a given day relative to the average computed in step (2).
(4) Finally, Aon Hewitt adds a directional indicator. An "(eq)" following the Index indicates the majority of money on that day flowed into equity funds (and out of fixed income funds), while an "(fi)" delineates the opposite – over half of the money transferred that day moved into fixed income funds and out of equity investments (this does not include the direction within self-directed window).
How should the Aon Hewitt 401(k) Index be interpreted?
A Aon Hewitt
For example, a Aon Hewitt Index of 1.8(eq) indicates that the transfer activity for that day is 80 percent higher than usual and that the majority of money went into equity funds. Likewise, a Aon Hewitt Index of .60(fi) indicates a 40 percent lower than usual activity level, with money flowing into fixed income funds. In addition to the daily Index reading, the Index Web Site has monthly allocation, contribution and transfer graphics, which will help identify trends. Also, the detailed data provided on the Aon Hewitt
How often is the Aon Hewitt 401(k) Index updated online?
Monthly observations are posted by the 10th business day of each month.
Is the Aon Hewitt 401(k) Index representative of all
No. The Aon Hewitt
Where does Aon Hewitt obtain the data to create the Aon Hewitt 401(k) Index?
Aon Hewitt Associates is the largest outsourcing provider in the U.S., providing all major benefit programs to employees, including pension,
Why did Aon Hewitt create the Aon Hewitt 401(k) Index in the first place?
With three trillion dollars currently invested in
The largest independent provider of
How do people access the Aon Hewitt 401(k) Index?
The Aon Hewitt
Who uses the Aon Hewitt 401(k) Index and how?
There are multiple ways to use the Aon Hewitt 401(k) Index. Plan sponsors, money managers, and academicians find it a useful data source. For example,