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

October 12, 2018

The third quarter of 2018 had no days of above-normal1 trading activity, according to the Alight Solutions 401(k) IndexTM. Since the inception of the 401(k) Index in 1997, this is only the second time that a quarter experienced no days of above-normal trading activity.

The only other time this happened was the first quarter of 2017. Alight’s data indicates that as stock values have increased, 401(k) investors have not been spurred to make trades, but are staying the course with their investment strategy.

Third quarter observations:

  • With zero days of above-normal activity, the transfers for the quarter, 0.42%, were the lowest since second quarter 2017
  • More than two-thirds (43 out of 63) of trading days in the third quarter had net trading movement from equities to fixed income

Alight Solutions 401(k) Index™ statistics for Q3 2018 and year-to-date:

Index Statistics

  Q3 2018 2018 YTD
Total transfers as percentage of starting balance 0.42% 1.02%
# Fixed days 43(68%) 110(59%)
# Equity days 20(32%) 78(42%)
# Above-normal days 0 29

 

Asset classes with most trading inflows in Q3 2018

  Percentage of inflows Index dollar value
($ mil)
Stable value funds 47% $393
Mid U.S. equity funds 20% $171
Money market funds 13% $107

 

Asset classes with most trading outflows in Q3 2018

  Percentage of outflows Index dollar value
($ mil)
Target date funds2 37% $310
Company stock funds 35% $296
Emerging markets funds 13% $108

 

Market observations:

The third quarter was mostly positive for investors. Large U.S. equities (represented by the S&P 500 Index) up 7.7%, and small U.S. equities (represented by the Russell 2000 Index) up 3.6%. International equities (represented by the MSCI All Country World ex-U.S. Index) saw less of an increase at 0.7% and U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) broke even for the month with a slight net gain of less than 0.1%.

Returns for common indices

  Q1 2018 2018 YTD
Bloomberg Barclays U.S. Aggregate Index 0.0% -1.6%
S&P 500 Index 7.7% 10.6%
Russell 2000 Index 3.6% 11.5%
MSCI All Country World ex-U.S. Index (net) 0.7% -3.1%

 

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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