401(k) Index & Observations Monthly Details: February 2016
February 2016 Review
According to the Aon Hewitt 401(k) IndexTM, February was a slow trading month for 401(k) plan participants with a daily trading average of 0.024% of balances—down from 0.034% in January. There was one day of above-normal1 trading activity.
When trading occurred, participants’ heavily favored fixed income. The asset classes with the most inflows were fixed income funds and the funds with the most outflows were primarily equity instruments. Fourteen out of 20 of trading days showed more inflows to fixed income.
Asset Classes with Most Trading Inflows in February
|
Percent of Inflows |
Index Dollar Value ($ mil) |
Bond funds |
58% |
$191 |
GIC/stable value funds |
28% |
$91 |
Money markets funds |
9% |
$29 |
Asset Classes with Most Trading Outflows in February
|
Percent of Outflows |
Index Dollar Value ($ mil) |
Target-date2 funds |
30% |
$97 |
Company stock funds |
26% |
$85 |
Large U.S. equity funds |
20% |
$66 |
Asset Classes with Most Contributions in February
|
Percent of Contributions |
Index Dollar Value ($ mil) |
Target-date funds |
37% |
$537 |
Large U.S. equity funds |
19% |
$268 |
After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities was 64.0% at the end of February, down slightly from 64.1% at the end of January. New contributions still favor stocks, but the contributions to equities decreased slightly from 66.3% in January to 65.9% at the end of February.
Asset Classes with Largest Percentage of Total Balance at end of February
|
Percent of Balance |
Index Dollar Value ($ mil) |
Target-date funds |
23% |
$36,497 |
Large U.S. equity funds |
22% |
$34,730 |
GIC/stable value funds |
14% |
$21,813 |
Market Observations
February market returns were mixed:
- U.S. Large-Cap equities (represented by the S&P 500 Index), and International equities (represented by the MSCI ACWI ex-US Index) had negative returns.
- U.S. Small-Cap equities (represented by the Russell 2000 Index) had 0.0% returns, while the bond index funds (represented by the Barclays Capital U.S. Aggregate Bond Index) had positive returns.
Aon Hewitt 401(k) IndexTM statistics and the returns of major market indices for periods ending February 29, 2016:
Index Statistics
Total Transfers as Percent of Starting Balance |
0.21% |
0.59% |
Number of Fixed Income Days |
14 (70%) |
28 (72%) |
Number of Equity Days |
6 (30%) |
11 (28%) |
Number of Above-Normal1 Days |
1 |
7 |
Indices Returns
Barclays Capital U.S. Aggregate Bond Index |
0.7% |
2.1% |
S&P 500 Index |
-0.1% |
-5.1% |
Russell 2000 Index |
0.0% |
-8.8% |
MSCI All Country World ex-U.S. Index (net) |
-1.1% |
-7.9% |
1 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) IndexTM 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 2 times the average daily net activity of the preceding 12 months.
2 Target-date funds also include the amounts in target-risk funds for companies who do not have target-date funds. The amount in the target-risk funds is less than 10% of the total.