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A tumbling stock market throughout March spurred 401(k) investors to trade at record-high levels, according to the Alight Solutions 401(k) Index™. Total transfers as a percentage of the starting balance was the highest since October 2008. March had 18 above-normal1 days of trading activity – the most above-normal days in a month in the more than 20-year history of the 401(k) Index.
March observations:
- On average, 0.079% of 401(k) balances were traded daily
- 15 of 22 days favored fixed income funds
Alight Solutions 401(k) Index statistics for March 2020:
| Index statistics | March | 2020 YTD |
|---|---|---|
| Total transfers as percentage of starting balance | 0.96% | 1.59% |
| # Fixed days | 15 (68%) | 43 (69%) |
| # Equity days | 7 (32%) | 19 (31%) |
| # Above-normal days | 18 | 29 |
Inflows and outflows during March:
- Trading inflows overwhelmingly went to stable value, money market and bond funds
- Outflows were primarily from target date2, large U.S. equity and international equity funds
Asset classes with most trading inflows in March
| Percentage of inflows | Index dollar value ($ mil) | |
|---|---|---|
| Stable value funds | 64% | $1,286 |
| Money market funds | 24% | $482 |
| Bond funds | 6% | $119 |
Asset classes with most trading outflows in March
| Percentage of outflows | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 48% | $974 |
| Large U.S. equity funds | 29% | $591 |
| International equity funds | 6% | $122 |
March investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities decreased from 66.0% in February to 63.1% in March
- New contributions to equities decreased from 68.2% in February to 67.3% in March
Asset classes with largest percentage of total balance at end of March
| Percentage of balance | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 29% | $54,974 |
| Large U.S. equity funds | 24% | $45,170 |
| Stable value funds | 12% | $22,790 |
Asset classes with most contributions in March
| Percentage of contributions | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 44% | $830 |
| Large U.S. equity funds | 21% | $407 |
| International equity funds | 8% | $144 |
March market observations:
All benchmark indices fell in March as equity markets experienced elevated levels of volatility. Large U.S. equities (represented by the S&P 500 Index) lost -12.4%, international equities (represented by the MSCI All Country World ex-U.S. Index) dropped -14.5% and small U.S. equities (represented by the Russell 2000 Index) sank -21.7%. Even U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) dipped slightly -0.6% for the month.
Returns for common indices
| March | 2020 YTD | |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | -0.6% | 3.2% |
| S&P 500 Index | -12.4% | -19.6% |
| Russell 2000 Index | -21.7% | -30.6% |
| MSCI All Country World ex-U.S. Index (net) | -14.5% | -23.4% |
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.
