Alight Solutions 401(k) Index™: August 2019 Observations

September 12, 2019

A volatile August on Wall Street spurred higher than normal 401(k) trading activity according to the Alight Solutions 401(k) Index™. Net trading activity for the month was the highest in 2019 at 0.24% of balances. Additionally, there were six above-normal1  days, the highest monthly total since December 2018.

August observations:

  • 19th month in a row that net trades have flowed from equities to fixed income
  • 16 of 22 days favored fixed income funds

The Alight Solutions 401(k) Index™ statistics for the month of August 2019:

Index statistics August 2019 YTD
Total transfers as percentage of starting balance 0.24% 1.54%
# Fixed days 16(73%) 142 (85%)
# Equity days 6 (27%) 26 (15%)
# Above-normal days 6 23

 

Inflows and outflows during the month:

  • Trading inflows mainly went to bond, stable value 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 August Percentage of inflows Index dollar value
($ mil)
Bond funds 50% $263
Stable value funds 29% $150
Money market funds 18% $94

 

Asset classes with most trading outflows in August Percentage of outflows Index dollar value
($ mil)
Large U.S. equity funds 55% $291
Target date funds 17% $92
Mid U.S. equity funds 10% $55

 

August investment portfolios:

  • After reflecting market movements and trading activity, average asset allocation in equities decreased from 67.7% in July to 67.5% in August
  • New contributions to equities decreased from 67.7% in July to 67.6% in August
Asset classes with largest percentage of total balance at end of August Percentage of balance Index dollar value
($ mil)
Target date funds 30% $61,672
Large U.S. equity funds 25% $50,621
Stable value funds 9% $18,157

 

Asset classes with most contributions in August Percentage of contribution Index dollar value
($ mil)
Target date funds 48% $559
Large U.S. equity funds 20% $230
International equity funds 7% $84

August market observations:

Equities fell during the month of August with small U.S. equities (represented by the Russell 2000 Index) losing 4.9%, large U.S. equities (represented by the S&P 500 Index) falling 1.6% and international equities (represented by the MSCI All Country World ex-U.S. Index) dropping 3.1%. Fixed income investors fared better with U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) gaining 2.6%.
 

Returns for common indices August 2019 YTD
Bloomberg Barclays U.S. Aggregate Index 2.6% 9.1%
S&P 500 Index -1.6% 18.3%
Russell 2000 Index -4.9% 11.9%
MSCI All Country World ex-U.S. Index (net) -3.1% 8.8%

 

Members of the media: please contact Dominic Belmonte 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 is when the net daily movement  exceeds two times the average daily net activity. A “moderate” relative transfer activity 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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