401(k) investors were content to watch their balances grow in December, according to the Alight Solutions 401(k) IndexTM. Trading was light as Wall Street indices rose to record levels. There were no days of above-normal1 activity and trading days were evenly split between those favoring equities versus fixed income funds.
December observations:
- Average net trading activity was 0.015% of 401(k) balances, the lowest monthly level in 2020
- 11 days favored equity funds and 11 days favored fixed income funds
Alight Solutions 401(k) Index statistics for December 2020:
| Index statistics | December | 2020 YTD |
| Total transfers as percentage of starting balance | 0.11% | 3.51% |
| # Fixed days | 11 (50%) | 184 (73%) |
| # Equity days | 11 (50%) | 69 (27%) |
| # Above-normal days | 0 | 47 |
Inflows and outflows during the month of December:
- Trading inflows mainly went to bond, target date and large U.S. equity funds
- Outflows were primarily from stable value, company stock and money market funds
Asset classes with most trading inflows in December
| Percentage of inflows | Index dollar value ($ mil) | |
| Bond funds | 58% | $160 |
| Target date2 funds | 15% | $41 |
| Large U.S. equity funds | 12% | $34 |
Asset classes with most trading outflows in December
| Percentage of outflows | Index dollar value ($ mil) | |
| Stable value funds | 45% | $123 |
| Company stock | 28% | $76 |
| Money market funds | 16% | $43 |
December investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities increased from 66.9% in November to 67.7% in December
- New contributions to equities remained at 67.3% from November through December
Asset classes with largest percentage of total balance at end of December
| Percentage of balance | Index dollar value ($ mil) | |
| Target date funds | 30% | $71,264 |
| Large U.S. equity funds | 25% | $60,315 |
| Stable value funds | 9% | $21,844 |
Asset classes with most contributions in December
| Percentage of contributions | Index dollar value ($ mil) | |
| Target date funds | 48% | $530 |
| Large U.S. equity funds | 20% | $221 |
| International equity funds | 7% | $79 |
December market observations:
The observed capital market indices were positive in December. U.S. small equities (represented by the Russell 2000 Index) gained 8.7%, international equities (represented by the MSCI All Country World ex-U.S. Index) earned 5.4% and U.S. large equities (represented by the S&P 500 Index) grew 3.8%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) were also up 0.1%.
Returns for common indices
| December | 2020 YTD | |
| Bloomberg Barclays U.S. Aggregate Index | 0.1% | 7.5% |
| S&P 500 Index | 3.8% | 18.4% |
| Russell 2000 Index | 8.7% | 20.0% |
| MSCI All Country World ex-U.S. Index (net) | 5.4% | 10.7% |
Members of the media: please contact Landis Cullen for questions about the Alight Solutions 401(k) Index™.
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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.
