Alight Solutions 401(k) Index: Fourth Quarter 2018 Observations

January 8, 2019

According to the Alight Solutions 401(k) IndexTM, 401(k) trading activity was very active in the fourth quarter of 2018—a sharp contrast to what was a record slow third quarter. The fourth quarter had 17 days of above-normal1 trading activity, mostly concentrated around days when the stock market lost ground.

Fourth quarter observations:

  • Since the inception of the Index in 1997, there have been only seven quarters with more than the 17 days of above-normal trading activity
  • In the fourth quarter, net transfers amounted to 0.55% of starting balances—the highest percentage since the third quarter of 2016
  • More than two-thirds (45 out of 63) of trading days in the fourth quarter had net trading movement from equities to fixed income

Alight Solutions 401(k) Index™ statistics for Q4 2018 and year-to-date:

 

Index Statistics Q4 2018 2018 YTD
Total transfers as percentage of starting balance 0.55% 1.42%
# Fixed days 45(71%) 155(62%)
# Equity days 18(29%) 96(38%)
# Above-normal days 17 46

 

Asset classes with most trading inflows in Q4 2018 Percentage of inflows Index dollar value
($ mil)
Stable value funds 70% $774
Money market funds 21% $235
Bond funds 7% $80

 

Asset classes with most trading outflows in Q4 2018 Percentage of outflows Index dollar value
($ mil)
Target date funds2 54% $601
Large U.S. equity funds 16% $175
Mid U.S. equity funds 13% $144

 

Market observations:

Investors experienced heightened volatility during the fourth quarter, with capital markets closing mostly negative. Small U.S. equities (represented by the Russell 2000 Index) lost -20.2%, large U.S. equities (represented by the S&P 500 Index) lost -13.5%, and international equities (represented by the MSCI All Country World ex-U.S. Index) lost -11.5%. U.S. bonds, however, (represented by the Bloomberg Barclays U.S. Aggregate Index) were up 1.6%.

Returns for common indices Q4 2018 2018 YTD
Bloomberg Barclays U.S. Aggregate Index 1.6% 0.0%
S&P 500 Index -13.5% -4.4%
Russell 2000 Index -20.2% -11.0%
MSCI All Country World ex-U.S. Index (net) -11.5% -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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Alight Solutions 401(k) Index: December 2018 Observations

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