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

August 9, 2018

July was a particularly slow month for trading for 401(k) investors in defined contribution plans, with no days of above-normal1 trading activity, according to the Alight Solutions 401(k) IndexTM. This continues the lull in trading activity observed over the previous two months (May and June each saw only one day of above-normal trading). When trades happened, investors favored fixed income funds over equities.

July observations:

  • There were no above-normal trading days in July—which was the first month since June 2017 with zero days of above-normal trading activity
  • 13 of 21 days favored fixed income funds
  • On average, 0.014% of balances were traded daily

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

Index statistics July 2018 YTD
Total transfers as percentage of starting balance 0.15% 0.80%
# Fixed days 13(62%) 80(55%)
# Equity days 8(38%) 66(45%)
# Above-normal days 0 29

 

Inflows and outflows during the month:

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

Asset classes with most trading inflows in July

  Percentage of inflows Index dollar value
($ mil)
Stable value funds 53% $160
Mid U.S. equity funds 22% $67
Money market funds 15% $46

 

Asset classes with most trading outflows in July

  Percentage of outflows Index dollar value
($ mil)
Company stock funds 27% $82
Target date funds 26% $77
Emerging market funds 14% $42

 

July investment portfolios:

  • At the end of July, asset allocation in equities was up at 68.9% compared to June, with 68.5% of assets in equities
  • New contributions in July matched those in June, with 68.1% being invested in equities.

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

  Percentage of balance Index dollar value
($ mil)
Target date funds 28% $57,512
Large U.S. equity funds 25% $51,861
Stable value funds 10% $20,511

 

Asset classes with most contributions in July

  Percentage of contributions Index dollar value
($ mil)
Target date funds 46% $465
Large U.S. equity funds 20% $202
International funds 8% $81

 

July market observations

Domestic and international equities experienced positive market returns for the month, with both large U.S. equities (represented by the S&P 500 Index) up 3.7% and small U.S. equities (represented by the Russell 2000 Index) up 1.7%, while international equities (represented by the MSCI All Country World ex-U.S. Index) settled between the domestic indices at 2.3%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) broke even for the month with a slight net gain less than 0.1%.

Returns for common indices

  July 2018 YTD
Bloomberg Barclays U.S. Aggregate Index 0.0% -1.6%
S&P 500 Index 3.7% 6.5%
Russell 2000 Index 1.7% 9.5%
MSCI All Country World ex-U.S. Index (net) 2.3% -1.5%

 

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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