The Markets July 7, 2016

Brexit News Bumped Up 401(k) Participant Trading in June

Transfers continued to favor fixed income investments.

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A total of 0.19% of 401(k) participant balances traded in June, with 18 out of the 22 days favoring inflows to fixed income instruments, the Aon Hewitt 401(k) Index shows.

Despite a slow start to the month, there were three days of above-normal trading activity—mostly coming after the Brexit news caused a swing in the equity market, Aon Hewitt says. The Index shows $138 million in inflows to GIC/Stable Value funds, $118 million into Bond funds, and $51 million into Money Market funds.

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Company stock funds led outflows ($117 million), while Target-Date funds posted $72 million in outflows and Large U.S. Equity funds saw $47 million in outflows.

After combining contributions, trades, and market activity in participants’ accounts, the percentage in equities at the end of June was 64.6% a slight decline from 64.8% in May. New contributions continue to favor stocks, with 65.6% of employee contributions invested in equities—a decrease from 65.7% in May.

NEXT: Q2 2016 Review

As a percentage of balances, 0.50% of balances traded in the second quarter of 2016, which is lower than the 0.82% percentage of balances traded in the first quarter of 2016.

Trading activity favored fixed income over equities. The Index shows Bond funds received the highest amount of inflows in Q2, at $369 million. GIC/Stable Value funds received $311 million in participant transfers, and Money Market funds posted $114 million in inflows.

Large U.S Equity funds posted $265 million in outflows during Q2, while Company Stock funds saw outflows totaling $195 million, Target-Date funds had outflows of $102 million, and International funds posted $100 million in outflows.

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