The Markets May 17, 2016

April a Slow Month for 401(k) Trading

Among those who did trade, fixed income was the favored asset class.
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April was a light trading month for 401(k) investors, according to the Aon Hewitt 401(k) Index.

In total, 0.16% of balances traded in April—down from 0.25% in March. There were zero days of above-normal trading activity for the month. The asset classes with the most inflows were fixed income funds and the funds with the most outflows were equity funds. Fourteen out of 21 of trading days showed more inflows to fixed income.

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Bond funds posted $130 million in inflows, while GIC/Stable Value funds received $85 million, and Money Market funds received $28 million.

Large U.S. Equity funds saw $66 million in outflows, and Company Stock funds posted $53 million in outflows. International Equity funds lost $39 million, while Small U.S. Equity funds lost $37 million.

After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities in at the end of April remained unchanged at 64.8%. New contributions still favor stocks, but the employee contributions to equities slightly fell to 65.9% in April from 66.0% in March.

The asset classes with the most contributions in April were Target-Date funds ($429 million) and Large U.S. Equity funds ($208 million). Target-Date funds also had the largest percentage of total balances at the end of April.

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Products May 17, 2016

Principal Issues Retirement Planning Challenge

As part of the challenge, individuals can walk through a Retirement Wellness Planner.
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To help people make progress toward having enough retirement savings, Principal has launched the Move to the Green Challenge.   

As part of the challenge, individuals can walk through a Retirement Wellness Planner. It uses interactive sliders, intuitive prompts and a real-time savings graph to show how making simple changes now may help financial security at retirement.

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The planner gives users a personalized score—within a range of green, yellow or red—to let them know if they’re on track. Green means a saver is set to replace the recommended 70% to 85% of their income in retirement.

Principal says a similar initiative last year brought positive results. Of those who participated, nearly one-third raised their retirement plan deferral amount to 10% of pay, an increase of 3.75 percentage points. In addition, there’s been a 30% increase in the number of retirement plan participants increasing their deferrals since the launch of the Retirement Wellness Planner.

“It’s clear that a more personalized, interactive online experience helps savers see where they can make better choices and they’re following through,” Jerry Patterson, senior vice president of retirement and income solutions at Principal, says. “We know that saving more and saving earlier is the best thing you can do to prepare for retirement.”

Those who take part in the Move to the Green Challenge are eligible to win a pair of Plantronics BackBeat FIT wireless stereo headphones. They do not have to have a retirement account with Principal in order to participate.

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