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A volatile January on Wall Street prompted 401(k) investors to increase trading, according to the Alight Solutions 401(k) Index™. January had five days of above-normal1 activity – three more than the combined total of the last four months of 2019.
January observations:
- On average, 0.021% of 401(k) balances were traded daily
- 12 of 21 days favored fixed income funds
Alight Solutions 401(k) Index statistics for January 2020:
| Index statistics | January | 2020 YTD |
|---|---|---|
| Total transfers as percentage of starting balance | 0.17% | 0.17% |
| # Fixed days | 12 (57%) | 12 (57%) |
| # Equity days | 9 (43%) | 9 (43%) |
| # Above-normal days | 5 | 5 |
Inflows and outflows during January:
- Trading inflows mainly went to bond, target date2 and international equity funds
- Outflows were primarily from stable value, large U.S. equity and small U.S. equity funds
Asset classes with most trading inflows in January
| Percentage of inflows | Index dollar value ($ mil) | |
|---|---|---|
| Bond funds | 77% | $289 |
| Target date funds | 12% | $46 |
| International equity funds | 7% | $26 |
Asset classes with most trading outflows in January
| Percentage of outflows | Index dollar value ($ mil) | |
|---|---|---|
| Stable value funds | 39% | $147 |
| Large U.S. equity funds | 26% | $99 |
| Small U.S. equity funds | 15% | $55 |
January investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities decreased from 68.1% in December to 67.7% in January
- New contributions to equities increased from 67.4% in December to 68.0% in January
Asset classes with largest percentage of total balance at end of January
| Percentage of balance | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 29% | $65,272 |
| Large U.S. equity funds | 26% | $57,724 |
| Stable value funds | 9% | $20,809 |
Asset classes with most contributions in January
| Percentage of contribution | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 47% | $753 |
| Large U.S. equity funds | 20% | $327 |
| International equity funds | 7% | $116 |
January market observations:
January was a volatile month for investors. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) generated a positive return of 1.9%. U.S. large cap equities (represented by the S&P 500 Index) were flat, international equities (represented by the MSCI All Country World ex-U.S. Index) dropped 2.7% and U.S. small cap equities (represented by the Russell 2000 Index) fell 3.2%.
Returns for common indices
| January | 2020 YTD | |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | 1.9% | 1.9% |
| S&P 500 Index | 0.0% | 0.0% |
| Russell 2000 Index | -3.2% | -3.2% |
| MSCI All Country World ex-U.S. Index (net) | -2.7% | -2.7% |
Members of the media: please contact Landis Cullen for questions about the Alight Solutions 401(k) Index™. Learn more about the Alight Solutions 401(k) Index™ here.
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A “normal” level of relative transfer activity is when the net daily movement of participants’ balances as a percent of total 401(k) balances within the Alight Solutions 401(k) Index™ equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months. A “high” relative transfer activity day is when the net daily movement exceeds two times the average daily net activity. A “moderate” relative transfer activity day is when the net daily movement is between 1.5 and two times the average daily net activity of the preceding 12 months.
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Target date funds also include the amounts in target risk funds. The amount in the target risk funds is less than 10% of the total.
