Alight Solutions 401(k) Index: December 2018 Observations

January 8, 2019

Nose diving stock indices on Wall Street brought a flurry of trading activity among 401(k) investors according to the Alight Solutions 401(k) Index™. Nine of the 19 trading days had above-normal1 trading activity with the majority of trades moving money from equities to fixed income funds.

December observations:

  • 15 of 19 days favored fixed income funds
  • On average, 0.028% of 401(k) balances were traded daily

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

Index statistics December 2018 YTD
Total transfers as percentage of starting balance 0.32% 1.42%
# Fixed days 15 (79%) 155 (62%)
# Equity days 4 (21%) 96 (38%)
# Above-normal days 9 46

 

Inflows and outflows during the month:

  • Trading inflows mainly went to stable value, money market, and bond funds
  • Outflows were primarily from target date2, large U.S. equity, and mid U.S. equity funds
Asset classes with most trading inflows in December Percentage of inflows Index dollar value
($ mil)
Stable value funds 63% $398
Money market funds 20% $126
Bond funds 15% $94

 

Asset classes with most trading outflows in December Percentage of outflows Index dollar value
($ mil)
Target date funds 40% $251
Large U.S. equity funds 30% $191
Mid U.S. equity funds 9% $57

 

December investment portfolios:

  • After reflecting market movements and trading activity, average asset allocation in equities decreased to 66.6% at the end of December from 68.1% at the end of November
  • New contributions in equities decreased to 66.7% in December from 67.7% in November
Asset classes with largest percentage of total balance at end of December Percentage of balance Index dollar value
($ mil)
Target date funds 28% $53,014
Large U.S. equity funds 24% $45,601
Stable value funds 11% $21,156

 

Asset classes with most contributions in December Percentage of contributions Index dollar value
($ mil)
Target date funds 47% $450
Large U.S. equity fund 20% $187
International funds 7% $69

December market observations

December proved to be another difficult month for many equity investors. Small U.S. equities (represented by the Russell 2000 Index) lost -11.9%, large U.S. equities (represented by the S&P 500 Index) lost -9.0%, and international equities (represented by the MSCI ACWI ex-US Index) lost -4.5%. Fixed income investors typically fared better, with the U.S. bond market (represented by the Bloomberg Barclays U.S. Aggregate Index) gaining 1.8%.

Returns for common indices December 2018 YTD
Bloomberg Barclays U.S. Aggregate Index 1.8% 0.0%
S&P 500 Index -9.0% -4.4%
Russell 2000 Index -11.9% -11.0%
MSCI All Country World ex-U.S. Index (net) -4.5% -14.2%

 

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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