Trading activity in 401(k) plans was up in February as investors responded to market volatility, according to the Alight Solutions 401(k) Index™. Nine of the 19 trading days in February had above-normal1 trading activity, with the majority occurring in the wake of the market downturn at the beginning of the month. Trades were split between equities and fixed income as investors jockeyed with the market, but the majority of trading dollars flowed from equities to fixed income funds.
February observations:
- Net transfers for the month of February were 0.29% of balances
- 10 out of 19 days favored equity funds; however, the days favoring fixed income had stronger inflows overall
The Alight Solutions 401(k) Index™ statistics for the month of February 2018:
| Index statistics | February | 2018 YTD |
|---|---|---|
| Total transfers as percentage of starting balance | 0.29% | 0.29% |
| # Fixed days | 9(47%) | 13(33%) |
| # Equity days | 10(53%) | 27(67%) |
| # Above normal days | 9 | 21 |
Inflows and outflows during the month:
- Trading inflows mainly went to stable value, money market, and bonds
- Outflows were primarily from large U.S. equity, target date2, and mid U.S. equity funds
Asset classes with most trading inflows in February
| Percentage of inflows | Index dollar value ($ mil) |
|
|---|---|---|
| Stable value funds | 58% | $354 |
| Money market funds | 17% | $105 |
| Bond funds | 11% | $70 |
Asset classes with most trading outflows in February
| Percentage of outflows | Index dollar value ($ mil) |
|
|---|---|---|
| Large U.S. equity funds | 36% | $220 |
| Target date funds | 29% | $117 |
| Mid U.S. equity funds | 11% | $66 |
February investment portfolios:
- At the end of February, 68.9% of balances were invested in equities, down from 69.5% at the end of January
- 68.1% of new contributions were invested in equities at the end of February, the same as January
Asset classes with largest percentage of total balance at end of February
| Percentage of balance | Index dollar value ($ mil) |
|
|---|---|---|
| Target date funds | 27% | $55,561 |
| Large U.S. equity funds | 24% | $49,197 |
| Stable value funds | 10% | $20,205 |
Asset classes with most contributions in February
| Percentage of contributions | Index dollar value ($ mil) |
|
|---|---|---|
| Target date funds | 43% | $667 |
| Large U.S. equity funds | 19% | $291 |
| International funds | 8% | $122 |
February market observations
After a strong January, all of the equity indices tracked by the Alight 401(k) Index™ experienced corrections during February. The month’s losses were enough to send small U.S. equities (represented by the Russell 2000 Index) into the red for the year. Losses in U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) extended into February, resulting in a year-to-date loss of over 2 percent.
Returns for common indices
| February | 2018 YTD | |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | -1.0% | -2.1% |
| S&P 500 Index | -3.7% | 1.8% |
| Russell 2000 Index | -3.8% | -1.4% |
| MSCI All Country World ex-U.S. Index (net) | -4.7% | 0.6% |
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.
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