Alight Solutions 401(k) Index™: Second Quarter 2018 Observations

July 11, 2018 Shruti Patel

Trading activity among 401(k) investors was noticeably quieter in the second quarter of 2018 than it was in the first quarter, according to the Alight Solutions 401(k) IndexTM. The second quarter had six days of above-normal1 trading activity —down from 23 days in the first quarter.

Second quarter observations:

  • Even though there were fewer days of above-normal activity, the net transfers for the second quarter were slightly higher than the first quarter. In total, 0.46% of balances were transferred in the second quarter, compared to 0.43% of balances in the first quarter
  • More than half (38 out of 64) of trading days in the second quarter had net trading dollars moving from equities to fixed income. The first quarter, by contrast, had more than half (32 out of 61) of trading days move from fixed income to equities

Alight Solutions 401(k) Index™ statistics for Q2 2018 and year-to-date:

Index Statistics

  Q2 2018 2018 YTD
Total transfers as percentage of starting balance 0.46% 0.68%
# Fixed days 38(59%) 67(54%)
# Equity days 26(41%) 58(46%)
# Above-normal days 6 29

 

Asset classes with most trading inflows in Q2 2018

  Percentage of inflows Index dollar value
($ mil)
Stable value funds 28% $259
Small U.S. equity funds 25% $235
Bond funds 23% $217

 

Asset classes with most trading outflows in Q2 2018

  Percentage of outflows Index dollar value
($ mil)
Target date funds2 36% $331
Large U.S. equity funds 17% $161
Emerging markets funds 16% $147

 

Market observations:

After a volatile first quarter, the domestic equity markets experienced a rebound with large U.S. equities (represented by the S&P 500 Index) up over 3%, and small U.S. equities (represented by the Russell 2000 Index) up just under 8%. Despite the positive performance in the domestic equities, international equities (represented by the MSCI All Country World ex-U.S. Index) continued to fall, losing nearly 3% in the second quarter, and U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) fell -0.2%.

Returns for common indices

  Q1 2018 2018 YTD
Bloomberg Barclays U.S. Aggregate Index -0.2% -1.6%
S&P 500 Index 3.4% 2.7%
Russell 2000 Index 7.8% 7.7%
MSCI All Country World ex-U.S. Index (net) -2.6% -3.8%

 

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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