Slow but steady 401(k) trading created an uptick in net trading activity for the quarter. According to the Alight Solutions 401(k) IndexTM, the total net transfers as a percentage of balances increased from 0.50% of balances in the second quarter to 0.92% of balances in the third quarter even though there were only two days of above-normal1 activity. Almost all days saw net trading activity out of equities and into fixed income funds.
Third quarter observations:
- Net transfers for the quarter were 0.92% of balances
- 58 out of 64 trading days in the third quarter had net trading dollars moving from equities to fixed income
Alight Solutions 401(k) Index™ statistics for Q3 2020 and year-to-date:
| Index Statistics | Q3 2020 | 2020 YTD |
|---|---|---|
| Net transfers as percentage of starting balance | 0.92% | 2.85% |
| # Fixed days | 58 (91%) | 140 (74%) |
| # Equity days | 6 (9%) | 49 (26%) |
| # Above-normal days | 2 | 37 |
Asset classes with most trading inflows in Q3 2020
| Percentage of inflows | Index dollar value ($ mil) | |
|---|---|---|
| Bond funds | 54% | $1,077 |
| Stable value funds | 32% | $644 |
| Money market funds | 9% | $183 |
Asset classes with most trading outflows in Q3 2020
| Percentage of outflows | Index dollar value ($ mil) | |
|---|---|---|
| Large U.S. equity funds | 37% | $738 |
| Target date2 funds | 16% | $316 |
| Mid U.S. equity funds | 15% | $305 |
Third quarter market observations:
Markets saw improvements in Q3. Large U.S. equities (represented by the S&P 500 Index) rose 8.9%, international equities (represented by the MSCI All Country World ex-U.S. Index) were up 6.3% and small U.S. equities (represented by the Russell 2000 Index) gained 4.9%. U.S. bonds (represented by Bloomberg Barclays U.S. Aggregate Index) were also in the black for the quarter.
| Return for common indices | Q3 2020 | 2020 YTD |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | 0.6% | 6.8% |
| S&P 500 Index | 8.9% | 5.6% |
| Russell 2000 Index | 4.9% | -8.7% |
| MSCI All Country World ex-U.S. Index (net) | 6.3% | -5.4% |
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.
- 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
- 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.
