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For the first time in the more than 20-year history of the Alight Solutions 401(k) IndexTM, an entire month saw net trading flows move to fixed income. In October, 401(k) investors made consistent and steady trades from equities to fixed income, and there were also seven days of above-normal1 trading activity—the most since March.
October observations:
- On average, 0.028% of 401(k) balances were traded daily
- All trading days in October favored fixed income funds
Alight Solutions 401(k) Index statistics for October 2020:
| Index statistics | October | 2020 YTD |
|---|---|---|
| Total transfers as percentage of starting balance | 0.54% | 3.39% |
| # Fixed days | 22 (100%) | 162 (77%) |
| # Equity days | 0 (0%) | 49 (23%) |
| # Above-normal days | 7 | 44 |
Inflows and outflows during October:
- Trading inflows mainly went to stable value, bond and money market funds
- Outflows were primarily from large U.S. equity, target date2 and mid U.S. equity funds
Asset classes with most trading inflows in October
| Percentage of inflows | Index dollar value ($ mil) | |
|---|---|---|
| Stable value funds | 49% | $603 |
| Bond funds | 39% | $472 |
| Money market funds | 11% | $138 |
Asset classes with most trading outflows in October
| Percentage of outflows | Index dollar value ($ mil) | |
|---|---|---|
| Large U.S. equity funds | 44% | $534 |
| Target date funds | 18% | $215 |
| Mid U.S. equity funds | 11% | $139 |
October investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities decreased from 66.1% in September to 65.4% in October
- New contributions to equities remained at 67.2% from September through October
Asset classes with largest percentage of total balance at end of October
| Percentage of balance | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 29% | $64,018 |
| Large U.S. equity funds | 25% | $55,102 |
| Stable value funds | 10% | $23,043 |
Asset classes with most contributions in October
| Percentage of contributions | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 48% | $546 |
| Large U.S. equity funds | 20% | $227 |
| International equity funds | 7% | $78 |
October market observations:
Indices were mixed through October with small U.S. equities (represented by the Russell 2000 Index) up 2.1%. The remaining indices fell with large U.S. equities (represented by the S&P 500 Index) dropping -2.7%, international equities (represented by the MSCI All Country World ex-U.S. Index) falling -2.2%, and U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) down -0.5%
Returns for common indices
| October | 2020 YTD | |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | -0.5% | 6.3% |
| S&P 500 Index | -2.7% | 2.8% |
| Russell 2000 Index | 2.1% | -6.8% |
| MSCI All Country World ex-U.S. Index (net) | -2.2% | -7.5% |
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.
