Defined contribution (DC) participant transfers in May averaged 0.031% of total balances daily, according to the Aon Hewitt 401(k) Index.
There were eight days of above-normal trading activity—the highest monthly total in two years, making it the first month with transfers above 0.03% since October 2013. This brings the total of above-normal trading days to 23 for the year to date.
Fixed-income trades elbowed equities, with 61% of trading days favoring fixed income. The most popular asset classes for inflows were international ($153 million), money market ($89 million), and GIC/stable value funds ($82 million). The most common classes for outflows were large U.S. equity ($107 million), company stock ($86 million), and small U.S. equity funds ($48 million).
Target-date funds continued to receive the majority of new contributions, with $240 million going into individuals’ accounts, while large U.S. equity funds received $116 million.
For the month, participant allocations to equities ticked up slightly, from 66.4% to 66.7%, after combining contributions, trades and market activity. Future contributions to equities decreased slightly, from 67.2% in April to 67% at the end of May, Aon Hewitt says.
Capital market returns had a mixed month. U.S. large-cap equities, represented by the S&P 500 Index, and U.S. small-cap equities, represented by the Russell 2000 Index, delivered positive returns, but international equities, represented by the MSCI ACWI ex-US Index, and U.S. fixed income, represented by the Barclays Aggregate Index, both slipped.
In the previous month, relatively few defined contribution participants enacted trades, continuing a tepid trend after 2015’s more volatile start.
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