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

Following April’s record low, May trading was up slightly, according to the Alight Solutions 401(k) IndexTM.  With no above-normal1 days, 0.009% of balances were traded daily on average in May. Money market (39%) and bond funds (28%) had the highest inflows, while target date2 (48%) and large U.S. equity funds (28%) had the highest outflows. New contributions to equities increased from 68.4% to 68.6%. 

May observations:

  • On average, 0.009% of 401(k) balances were traded daily.
  • 16 of 22 days favored fixed income funds.

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

Index statistics

May

2023 YTD

Total transfers as percentage of starting balance

0.08%

0.33%

# Fixed days

16 (73%)

72 (70%)

# Equity days

6 (27%)

31 (30%)

# Above-normal1 days

0

2


Inflows and outflows during the month of May:

  • Trading inflows mainly went to money market, bond and stable value funds.
  • Outflows were primarily from target date2, large U.S. equity and small U.S. equity funds.

Asset classes with most trading

inflows in May

Percentage of inflows

Index dollar value ($mil)

Money market funds

39%

$74

Bond funds

28%

$54

Stable value funds

23%

$43

Asset classes with most trading

outflows in May

Percentage of outflows

Index dollar value ($mil)

Target date funds2

48%

$91

Large U.S. equity funds

28%

$53

Small U.S. equity funds

7%

$14


May investment portfolios:

  • After reflecting market movements and trading activity, average asset allocation in equities remained at 68.8% from April to May.
  • New contributions to equities increased from 68.4% in April to 68.6% in May.

Asset classes with largest percentage

of total balance at the end of May

  Percentage of balance

  Index dollar value ($mil)  

Target date funds2

31%

$68,693

Large U.S. equity funds

27%

$60,098

Stable value funds

9%

$19,630

Asset classes with most 

contributions in May

Percentage of contributions

Index dollar value($mil)

Target date funds2

50%

$592

Large U.S. equity funds

20%

$243

International equity funds

7%

$84



May market observations:

Returns for common indices

May

2023 YTD

Bloomberg Barclays U.S. Aggregate Index

-1.09%

2.46%

S&P 500 Index

0.43%

9.65%

Russell 2000 Index

-0.92%

-0.04%

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

-3.64%

4.77%

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.

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

In August, 401(k) investors preferred fixed income investments, with money market and bond funds receiving 74% of net trading dollars, according to the Alight Solutions 401(k) Index™.

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

401(k) investors exhibited see-sawing trading activity in the second quarter of 2023, according to the Alight Solutions 401(k) IndexTM. April and May saw trading activity favoring fixed income, but June saw investors moving money back to equities.