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

November 6, 2018

As stocks tumbled in October, 401(k) investors increased trading activity according to Alight Solutions 401(k) IndexTM. All told, the month had five days of above-normal1 trading activity, including the first high trading days since April 2018. Net trades overwhelmingly went from equity funds to fixed income funds.

October observations:

  • In October, 15 of 23 days favored fixed income funds
  • On average, 0.019% of 401(k) balances were traded daily

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

Index statistics October 2018 YTD
Total transfers as percentage of starting balance 0.19% 1.10%
# Fixed days 15 (65%) 125 (59%)
# Equity days 8 (35%) 86 (41%)
# Above-normal days 5 34

 

Inflows and outflows during the month:

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

Asset classes with most trading inflows in October

  Percentage of inflows Index dollar value
($ mil)
Stable value funds 60% $224
Money market funds 17% $63
Company stock 16% $60

 

Asset classes with most trading outflows in October

  Percentage of outflows Index dollar value
($ mil)
Target date funds 51% $191
Small U.S. equity funds 19% $70
Mid U.S. equity funds 14% $52

 

October investment portfolios:

  • Asset allocation in equities decreased to 68.0% at the end of October from 68.9% at the end of September
  • New contributions in equities were 68.1% in October, up from to 68.0% in September

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

  Percentage of balance Index dollar value
($ mil)
Target date funds 28% $54,846
Large U.S. equity funds 25% $49,170
Stable value funds 11% $20,759

 

Asset classes with most contributions in October

  Percentage of contributions Index dollar value
($ mil)
Target date funds 47% $459
Large U.S. equity fund 20% $197
International funds 7% $72

 

October market observations

October proved to be a difficult month for investors.  Large-Cap U.S. equities (represented by the S&P 500 Index) fell -6.8%, Small-Cap U.S. equities (represented by the Russell 2000 Index) fell -10.9%, and International equities (represented by the MSCI ACWI ex-US Index) fell -8.1%.  Although not as severely as equity markets, the U.S. Bond market (represented by the Bloomberg Barclays U.S. Aggregate Index) also fell, losing close to -1%.

Returns for common indices

  October 2018 YTD
Bloomberg Barclays U.S. Aggregate Index -0.8% -2.4%
S&P 500 Index -6.8% 3.0%
Russell 2000 Index -10.9% -0.6%
MSCI All Country World ex-U.S. Index (net) -8.1% -11.0%

 

 

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.

Download a version of this report

 Download now

 

 

 

Previous Article
One red, one blue – split control of Congress – what does it mean for you?
One red, one blue – split control of Congress – what does it mean for you?

2018 Election - A split decision - What is the impact of this week’s election on your employer-provided ben...

Next Article
How to communicate a dependent verification audit to your people
How to communicate a dependent verification audit to your people

How do you explain the benefits - and the process - of a dependent eligibility audit to your employees? Che...