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Alight Solutions 401(k) Index™: August 2022 Observations

401(k) plan investors remained light traders during August’s rising and falling of stocks, according to the Alight 401(k) IndexTM.  While there were two above-normal1 trading days—the first since mid-June—the net trades as a percent of balance (0.07%) reflected the second lowest month in the more than 20-year history of the Alight 401(k) IndexTM. This is mainly because traders favored equities in the beginning of the month as stocks were gaining, but they favored fixed income funds as Wall Street had sell-offs in the second half of the month.  Overall, bond funds topped inflows (50%), while most outflows were from target date funds(37%).


August observations:

  • On average, 0.009% of 401(k) balances were traded daily.
  • 13 of 23 days favored equity funds.

The Alight Solutions 401(k) IndexTM statistics for the month of August:

Index statistics

August

2022 YTD

Total transfers as percentage of starting balance

0.07%

0.91%

# Fixed days

10 (43%)

116 (69%)

# Equity days

13 (57%)

51 (31%)

# Above-normal1 days

2

35


Inflows and outflows during the month of August:

  • Trading inflows mainly went to bond, large U.S. equity and international equity funds.
  • Outflows were primarily from target date2, stable value and mid U.S. equity funds.

Asset classes with most trading inflows in August

Percentage of inflows

Index dollar value ($mil)

Bond funds

50%

$78

Large U.S. equity funds

36%

$57

International equity funds

8%

$13

Asset classes with most trading outflows in August

Percentage of outflows

Index dollar value($mil)

Target date funds2

37%

$58

Stable value funds

25%

$40

Mid U.S. equity funds

14%

$22


August investment portfolios:

  • After reflecting market movements and trading activity, average asset allocation in equities decreased from 68.6% in July to 68.3% in August.
  • New contributions to equities remained at 68.5% from July through August.

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

Percentage of balance

Index dollar value ($mil)

Target date funds2

30%

$66,712

Large U.S. equity funds

26%

$58,765

Stable value funds

10%

$21,444

Asset classes with most contributions in August

Percentage of contributions

Index dollar value($mil)

Target date funds2

50%

$536

Large U.S. equity funds

21%

$222

International equity funds

7%

$72



August market observations:

Returns for common indices

August

2022 YTD

Bloomberg Barclays U.S. Aggregate Index

-2.83%

-10.75 %

S&P 500 Index

-4.08 %

-16.14 %

Russell 2000 Index

-2.05 %

-17.16 %

MSCI All Country World ex-U.S. Index (net)

-3.22%

-18.34 %

1 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 2 times the average daily net activity of the preceding 12 months.

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.

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