Defined contribution plan participants transferred 0.025% of total daily balances during December 2013, which is slightly above November 2013’s average of 0.024% and below the 12-month daily average of 0.029%. December 2013 had two days with transfer activity above normal levels, which was the same as November.
The index defines a normal level of relative transfer activity as when the net daily movement of participants’ balances as a percent of total 401(k) balances within the index equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.
The U.S. equity markets continued to improve in December 2013, as the S&P 500 Index gained 2.5% during the month. Non-U.S. equities also ended the year on a positive note, with the MSCI All-Country World ex-U.S. Index returning 0.9% during December 2013. The fixed-income markets, as measured by the Barclays U.S. Aggregate Index, declined by 0.6% during month.
Net transfer activity for December 2013 continued to favor diversified equities (equity assets excluding company stock), with $332 million (0.21%) flowing in. Total net activity across the Aon Hewitt 401(k) Index came in with $359 million (0.23%) transferred for the month. Transfer activity trends were generally consistent throughout the fourth quarter of 2013.
Among the asset classes with net inflows during December 2013, large U.S. funds gained the most, receiving $160 million (45%) of flows. Additionally, international funds had $121 million (34%), while both small and mid U.S. equity funds each received about $26 million (7%) of the monthly inflows.
On average, participants’ overall equity allocation increased to 65.2% at the end of December 2013, up from 64.6% in November 2013.
The percentage of employee discretionary contributions allocated to equities slightly decreased from the high in November 2013 (now 64.1%, down from 65.2%).