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Alight Solutions 401(k) Index™: Fourth Quarter 2020 observations

401(k) investors resumed trading into equities in the fourth quarter, according to the Alight Solutions 401(k) Index.

401(k) investors resumed trading into equities in the fourth quarter, according to the Alight Solutions 401(k) IndexTM. Twenty days in the quarter saw net trading activity move money from fixed income to equities—much higher than the six days in the third quarter.  Overall net trading volume was light with 0.68% of balances traded (down from 0.92% in the third quarter).  

 

Fourth quarter observations:

  • All the days that favored equities were in November and December
  • The 10 days of above-normal1 activity in the fourth quarter were more than the second and third quarter combined (2).

 

Alight Solutions 401(k) Index™ statistics for Q4 2020 and year-to-date:

Index Statistics Q4 2020 2020 YTD
Net transfers as percentage of starting balance 0.68% 3.51%
# Fixed days 44 (69%) 184 (73%)
# Equity days 20 (31%) 69 (27%)
# Above-normal days 10 47

 

Asset classes with most trading inflows in Q4 2020

  Percentage of inflows Index dollar value ($ mil)
Bond funds 55% $849
Stable value funds 36% $546
Money market funds 5% $70

 

Asset classes with most trading outflows in Q4 2020

  Percentage of outflows Index dollar value ($ mil)
Large U.S. equity funds 37% $572
Company stock 23% $348
Mid U.S. equity funds 10% $147

  

Fourth quarter market observations:


The fourth quarter was positive across all observed indices. Small U.S. equities (represented by the Russell 2000 Index) rose 31.4%, international equities (represented by the MSCI All Country World ex-U.S. Index) grew 17.0%, and large U.S. equities (represented by the S&P 500 Index) gained 12.2%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) also rose 0.7%.

Returns for common indices
Q4 2020 2020 YTD
Bloomberg Barclays U.S. Aggregate Index 0.7% 7.5%
S&P 500 Index 12.2% 18.4%
Russell 2000 Index 31.4% 20.0%
MSCI All Country World ex-U.S. Index (net) 17.0% 10.7%

 

Members of the media: please contact Landis Cullen for questions about the Alight Solutions 401(k) Index™. 


  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 two times the average daily net activity of the preceding 12 months

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