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

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


Loading

Market Commentary

  • Trading activity in defined contribution plans in June continued to be light—marking the second lowest monthly level since Aon Hewitt began tracking this activity in 1997.. According to Aon Hewitt’s 401(k) Index, participants traded only 0.019% of their balances. June marked the eighth consecutive month that trading activity was below 0.03%. Across the Index, total transfer activity was $319 million (0.20%) with one day in June with above normal*.
  • When trading occurred, plan participants slightly favored fixed income funds over equities. In June, 57% of trading days saw fixed income receive more inflows, down from 62% of days in May. Overall, net transfer activity moved away from diversified equities (equity assets excluding company stock) by $13 million (0.01%). For the quarter ending June 30, 62% of trading days favored fixed income funds.
  • Bond funds received the most inflows in June with $108 million (34%), followed by premixed funds at $68 million (21%), and international funds with $60 million (19%). Most equity-based asset classes had net outflows in June. Company stock funds led the net outflow activity with $158 million (50%) transferring out, followed by small U.S. equity funds with $98 million (31%) and specialty/sector funds at $25 million (8%).
  • June was another positive month for the global equity markets. The emerging equity markets, as measured by the MSCI Emerging Markets Index, led the way with a return of 2.7%. This is the fifth consecutive month that this index has posted a positive gain. Both U.S. equities and non-U.S. equities also posted positive results for the month, as the S&P 500 Index gained 2.1% and the MSCI All Country World ex-U.S. Index gained 1.7%. The fixed income market, as measured by the Barclays U.S. Aggregate Index, returned 0.1% during the month.
  • During the second quarter, both the emerging and developed equity markets performed well. The MSCI Emerging Markets Index gained 6.6% during the quarter, while the S&P 500 and MSCI All Country World ex-U.S. Index returned 5.2% and 5.0%, respectively. The fixed income market also posted positive performance, as the Barclays U.S. Aggregate Index returned 2.0%.
  • After incorporating trading and market activity, participants’ overall allocation to equities at the end of June stood at 65.5%, a marginal increase from 65.4% at the end of May. Future contributions to equities remained unchanged at 66.6%.

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

Index Returns

June Q2 2014 YTD
Barclays Capital Aggregate Bond Index 0.1% 2.0% 3.9%
S&P 500 2.1% 5.2% 7.1%
Russell 2000 Index 5.3% 2.1% 3.2%
MSCI All Country World ex-U.S. Index (net) 1.7% 5.0% 5.6%

Index Statistics

June Q2 2014 YTD
Average Daily Net Activity 0.019% 0.022% 0.023%
Number of Fixed Income Days 12 (57%) 39 (62%) 68 (55%)
Number of Equity Days 9 (43%) 24 (38%) 56 (45%)
Number of Above Normal Days 1 4 9

*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