June saw an uptick in 401(k) trading activity, according to the Alight Solutions 401(k) Index™. The total net transfers as a percentage of starting balance was 0.26%—much higher than 0.11% in May and 0.13% in April, but significantly lower than 0.96% in March. There were three days of above-normal1 activity.
June observations:
- On average, 0.023% of 401(k) balances were traded daily
- 17 of 22 days favored fixed income funds
Alight Solutions 401(k) Index statistics for June 2020:
| Index statistics | June | 2020 YTD |
|---|---|---|
| Total transfers as percentage of starting balance | 0.26% | 1.96% |
| # Fixed days | 17 (77%) | 82 (66%) |
| # Equity days | 5 (23%) | 43 (34%) |
| # Above-normal days | 3 | 35 |
Inflows and outflows during June:
- Trading inflows mainly went to bond, stable value and money market funds
- Outflows were primarily from large U.S. equity, target date2 and company stock funds
Asset classes with most trading inflows in June
| Percentage of inflows | Index dollar value ($ mil) | |
|---|---|---|
| Bond funds | 62% | $335 |
| Stable value funds | 26% | $139 |
| Money market funds | 10% | $55 |
Asset classes with most trading outflows in June
| Percentage of outflows | Index dollar value ($ mil) | |
|---|---|---|
| Large U.S. equity funds | 45% | $245 |
| Target date funds | 24% | $129 |
| Company stock | 13% | $69 |
June investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities increased from 65.4% in May to 65.6% in June
- New contributions to equities increased from 67.2% in May to 67.5% in June
Asset classes with largest percentage of total balance at end of June
| Percentage of balance | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 29% | $62,802 |
| Large U.S. equity funds | 25% | $54,482 |
| Stable value funds | 10% | $22,655 |
Asset classes with most contributions in June
| Percentage of contributions | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 46% | $483 |
| Large U.S. equity funds | 21% | $219 |
| International equity funds | 7% | $76 |
June market observations:
June saw moderate returns across all indices with international equities (represented by the MSCI All Country World ex-U.S. Index) leading, up 4.5%. U.S. equities followed, with small U.S. equities (represented by the Russell 2000 Index) rising 3.5% and large U.S. equities (represented by the S&P 500 Index) gaining 2.0%. U.S. bonds (represented by Bloomberg Barclays U.S. Aggregate Index) were also up 0.6%.
Returns for common indices
| June | 2020 YTD | |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | 0.6% | 6.1% |
| S&P 500 Index | 2.0% | -3.1% |
| Russell 2000 Index | 3.5% | -13.0% |
| MSCI All Country World ex-U.S. Index (net) | 4.5% | -9.8% |
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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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.
