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Alight Solutions 401(k) Index™: January 2023 Observations

With just one above-normal1 day in January, 401(k) plan investors began 2023 with light trading, according to the Alight Solutions 401(k) IndexTM.  Just 0.011% of balances were traded daily, the lowest January since the 401(k) Index was launched in 1997. Bond funds accounted for the highest level of inflows, while most outflows came from target date funds2 and company stock. New contributions to equities increased to 68.2% following December’s six-year low of 66.1%


January observations:

  • On average, 0.011% of 401(k) balances were traded daily.
  • 16 of 20 days favored fixed income funds.

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

Index statistics

January

2023 YTD

Total transfers as percentage of starting balance

0.08%

0.08%

# Fixed days

16 (80%)

16 (80%)

# Equity days

4 (20%)

4 (20%)

# Above-normal1 days

1

1


Inflows and outflows during the month of January:

  • Trading inflows mainly went to bond, emerging markets and money market funds.
  • Outflows were primarily from target date funds2, company stock and large U.S. equity funds.

Asset classes with most trading

inflows in January

Percentage of inflows

Index dollar value ($mil)

Bond funds

82%

$151

Emerging market funds

8%

$15

Money market funds

8%

$15

Asset classes with most trading

outflows in January

Percentage of outflows

Index dollar value($mil)

Target date funds2

56%

$102

Company stock

12%

$21

Large U.S. equity funds

11%

$19


January investment portfolios:

  • After reflecting market movements and trading activity, average asset allocation in equities increased from 68.2% in December to 68.9% in January.
  • New contributions to equities increased from 66.1% in December to 68.2% in January.

Asset classes with largest percentage

of total balance at the end of January

  Percentage of balance

  Index dollar value ($mil)  

Target date funds2

30%

$71,102

Large U.S. equity funds

26%

$61,159

Stable value funds

9%

$21,168

Asset classes with most

contributions in January

Percentage of contributions

Index dollar value($mil)

Target date funds2

48%

$764

Large U.S. equity funds

21%

$327

International equity funds

7%

$115



January market observations:

Returns for common indices

January

2023 YTD

Bloomberg Barclays U.S. Aggregate Index

3.08%

3.08%

S&P 500 Index

6.28%

6.28%

Russell 2000 Index

9.75%

9.75%

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

8.11%

8.11%

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.

Related Insights


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Alight Solutions 401(k) Index™: Q2 2023 Observations

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