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Participants November 14, 2016
DC Investors Stuck With Portfolio Strategies During October
Negative returns were coupled with low trading volumes for DC participants during October.
Reported by Javier Simon
Defined contribution (DC) plan investors went through a shaky month of generally negative equity and fixed-income returns, coupled with light trading, according to Aon Hewitt’s 401(k) Index.
The firm reports that only 0.16% of total balances traded in the month, and there were just two days of above-normal trading activity. For participants who traded, 15 out of 21 trading days favored fixed-income funds over equity funds.
According to Aon Hewitt data, asset classes with the most trading were GIC/stable value funds (36%), international funds (23%) and money market funds (20%). Funds that saw the most contributions in October were target-date funds (TDFs) and large U.S. equity funds. TDFs also held the largest percentage of balances at the end of October (24%) across the 401(k) market. Preceding TDFs were large U.S. equity funds (22%) valued at $37,549 and GIC/stable value funds (13%) valued at $22,664 million
Overall, Aon Hewitt says the month was mostly negative for investors. U.S. Small-Cap equities (represented by the Russell 2000 Index) fell nearly 5%, while U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) fell nearly 1%. U.S. Large-Cap equities (represented by the S&P 500 Index) fell nearly 2% and International equities (represented by the MSCI All Country World ex-USA Index) fell approximately 1.5%.