Alight Solutions 401(k) Index™: May 2018 Observations

June 15, 2018 Shruti Patel

May was a slow month for trading activity in defined contribution plans, according to the Alight Solutions 401(k) IndexTM, with one day of above-normal1 trading activity for the month.  When 401(k) investors made trades, they tended to favor fixed income funds over equities.

May observations:

  • Continued movement away from equities, with 13 of 22 days favoring fixed income funds
  • On average, 0.014% of balances were traded daily

The Alight Solutions 401(k) Index™ statistics for the month of May 2018:

Index statistics May 2018 YTD
Total transfers as percentage of starting balance 0.14% 0.58%
# Fixed days 13(59%) 54(52%)
# Equity days 9(41%) 50(48%)
# Above-normal days 1 28

 

Inflows and outflows during the month:

  • Trading inflows mainly went to stable value, small U.S. equity, and bond funds
  • Outflows were primarily from target date2, emerging markets, and company stock funds

Asset classes with most trading inflows in May

  Percentage of inflows Index dollar value
($ mil)
Stable value funds 26% $77
Small U.S. equity funds 20% $58
Bond funds 18% $53

 

Asset classes with most trading outflows in May

  Percentage of outflows Index dollar value
($ mil)
Target date funds 35% $103
Emerging markets funds 27% $80
Company stock 27% $77

 

May investment portfolios:

  • At the end of May, 68.5% of balances were invested in equities, up slightly from 68.4% in April
  • 68% of new contributions were invested in equities at the end of  May, down from 68.2% in April

Asset classes with largest percentage of total balance at end of May

  Percentage of balance Index dollar value
($ mil)
Target date funds 27% $55,760
Large U.S. equity funds 24% $49,523
Stable value funds 10% $20,435

 

Asset classes with most contributions in May

  Percentage of contributions Index dollar value
($ mil)
Target date funds 46% $499
Large U.S. equity funds 20% $214
International funds 8% $89

 

May market observations

Domestic market returns were positive last month, with small U.S. equities (represented by the Russell 2000 Index) up over 6% and large U.S. equities (represented by the S&P 500 Index) over 2%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) followed suit, gaining close to 1%. International equities, however, fell over -2% in last month. 

Returns for common indices

  May 2018 YTD
Bloomberg Barclays U.S. Aggregate Index 0.7% -1.5%
S&P 500 Index 2.4% 2.0%
Russell 2000 Index 6.1% 6.9%
MSCI All Country World ex-U.S. Index (net) -2.3% -1.9%

 

Members of the media: please contact MacKenzie Lucas for questions about the Alight Solutions 401(k) Index™.

Learn more about the Alight Solutions 401(k) Index™ here.

  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 two times the average daily net activity of the preceding 12 months.

  2. 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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