April 2017 401(k) Index

June 15, 2017 Christy Lukes

Observations from the April 2017 Index 401(k) Index Report

April saw a slight increase in trading activity among investors in defined contribution plans, with two days of above-normal trading, according to the Alight Solutions 401(k) Index. On average, 0.015% of balances traded each day, up slightly from 0.014% in March. When investors made trades, nearly half of inflows went into international funds, with the vast majority of outflows coming from company stock and U.S. equity funds.

Asset Classes with Most Trading Inflows in April

  Percentage of inflows Index Dollar Value ($ mil)
International funds 47% $121
Target-date2 funds 23% $61
Emerging markets funds 15% $40

 

Asset Classes with Most Trading Outflows in April

  Percentage of outflows Index Dollar Value ($ mil)
Company stock 50% $130
Large U.S. equity funds 19% $49
Small U.S. equity funds 15% $39

After combining contributions, trades, and market activity in investors’ accounts, the percentage of balances in equities was 66.6% at the end of April, up marginally from 66.5% at the end of March. When investors made new contributions, equities were favored, with 66.8% of contributions going to equities, down from 67.3% in March.

Asset Classes with Most Contributions in April

  Percentage of contributions Index Dollar Value ($ mil)
Target date funds 43% $432
Large U.S. equity funds 20% $200
International funds 8% $79

 

Asset Classes with Largest Percentage of Total Balance at end of April

  Percentage of balance Index Dollar Value ($ mil)
Target date funds 25% $46,339
Large U.S. equity funds 24% $43,988
Stable value funds 12% $22,084

The following table shows Alight 401(k) IndexTM statistics for the period ending April 30, 2017:

Index Statistics

  April 2017 YTD
Total Transfers as Percentage of Starting Balance: 0.14% 0.52%
# Fixed days: 9 (47%) 40 (49%)
# Equity days: 10 (53%) 41 (51%)
# Above normal1 days: 2 2

Market Observations

Capital markets saw modest gains across the board in April. International equities (represented by the MSCI All Country World ex-U.S. Index) increased by over 2% during the month, while U.S. Large-Cap (represented by the S&P 500 Index) and U.S. Small-Cap (represented by the Russell 2000 Index) each increased by over 1%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) increased nearly 1% during April.

Indices Returns

  April 2017 YTD
Bloomberg Barclays U.S. Aggregate Index 0.8% 1.6%
S&P 500 Index 1.0% 7.2%
Russell 2000 Index 1.1% 3.6%
MSCI All Country World ex-U.S. Index (net) 2.1% 10.2%

 

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 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 for companies who do not have target-date funds. The amount in the target-risk funds is less than 10% of the total.
3 Target-date funds also include the amounts in target-risk funds for companies who do not have target-date funds. The amount in the target-risk funds is less than 10% of the total.

 

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