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Joined: September 07, 2011

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By Nick Thornton

June marked the second-lowest month of trading activity in defined contribution plans since Aon Hewitt began tracking such activity in 1997.

According to Aon Hewitt’s 401(k) index, it was the eighth consecutive month in which trading activity was below 0.03 percent of total account balances.

Participants traded just 0.019 percent of their total account balances in June.

By comparison, in June of 2000, 0.12 percent of all account assets were traded, when the Dow was topping out at around 11,300. A year later, it would fall to around 8,300.

At the end of June, overall allocation to equities was 65.5 percent, a marginal increase from the 65.4 percent seen the previous month.

In what limited trading that did occur this June, plan participants slightly favored fixed-income over equities, according the index. More than half of the month’s trading days saw greater inflows into fixed-income.

For the quarter ending June 30, 62 percent of trading days saw inflows into fixed-income exceed inflows into equities.

Bond funds led all fixed-income investments in June, attracting $108 million of new flows.

Most equity-based asset classes experienced net outflows. Company stock funds saw $158 million, or half of all out-flow, moved into other assets. Small-cap U.S. equity funds saw $98 million, or 31 percent of outflow activity, move to other investments.

This was in spite of June seeing several new highs in the DJIA and the S&P 500, and global equity markets experiencing more positive returns.

Emerging equity markets returned 2.7 percent in June, marking the fifth consecutive month that asset class has led all others. The S&P 500 returned 2.1 percent, and fixed-income, as measured by the Barclays U.S. Aggregate Index, returned 0.1 percent.

For the entirety of the second quarter, emerging markets returned 6.6 percent. The S&P returned 5.2 percent, while fixed-income returned 2.0 percent.

Originally published on BenefitsPro.com
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