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Alight Solutions 401(k) Index™: August 2020 observations

As stock markets posted their largest August gain in over 35 years, 401(k) investors were light traders according to the Alight Solutions 401(k) IndexTM. There was one day of above-normal1 trading activity and three days of low trading activity. When trades occurred, people traded from equities to fixed income.

August observations:

  • On average, 0.016% of 401(k) balances were traded daily
  • 19 of 21 days favored fixed income funds

 

Alight Solutions 401(k) Index statistics for August 2020:

Index statistics August 2020 YTD
Total transfers as percentage of starting balance 0.26% 2.57%
# Fixed days 19 (90%) 121 (72%)
# Equity days 2 (10%) 47 (28%)
# Above-normal days 1 37

 

Inflows and outflows during August:

  • Trading inflows mainly went to bond funds, stable value funds and self-directed brokerage windows
  • Outflows were primarily from large U.S. equity, mid U.S. equity and company stock funds

 

Asset classes with most trading inflows in August

  Percentage of inflows Index dollar value ($ mil)
Bond funds 58% $335
Stable value funds 27% $155
Self-directed brokerage windows 8% $49

 

Asset classes with most trading outflows in August

  Percentage of outflows Index dollar value ($ mil)
Large U.S. equity funds 25% $143
Mid U.S. equity funds 21% $121
Company stock 21% $120

 

August investment portfolios:

  • After reflecting market movements and trading activity, average asset allocation in equities increased from 65.9% in July to 66.6% in August
  • New contributions to equities decreased from 67.5% in July to 67.2% in August

 

Asset classes with largest percentage of total balance at end of August

  Percentage of balance Index dollar value ($ mil)
Target date2 funds 29% $66,942
Large U.S. equity funds 26% $60,095
Stable value funds 10% $22,677

 

Asset classes with most contributions in August

  Percentage of contributions Index dollar value ($ mil)
Target date funds 47% $492
Large U.S. equity funds 20% $213
International equity funds 7% $73

 

August market observations:

Equity indices finished August with positive returns, while fixed income lost value for the first time this year. Large U.S. equities (represented by the S&P 500 Index) led, up +7.2%, followed by small U.S. equities (represented by the Russell 200 Index) and international equities (represented by the MSCI All Country World ex-U.S. Index), up +5.6% and +4.3%, respectively. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) fell -0.8%.

 

Returns for common indices

  August 2020 YTD
Bloomberg Barclays U.S. Aggregate Index -0.8% 6.9%
S&P 500 Index 7.2% 9.7%
Russell 2000 Index 5.6% -5.5%
MSCI All Country World ex-U.S. Index (net) 4.3% -3.1%

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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