Alight Solutions 401(k) Index: August 2020 Observations

As stock markets posted their largest August gain in over 35 years, 401(k) investors were light traders according to the Alight Solutions 401(k) Index^TM. There was one day of above-normal¹ trading activity and three days of low trading activity. When trades occurred, people traded from equities to fixed income.

August observations:

On average, 0.016% of 401(k) balances were traded daily
19 of 21 days favored fixed income funds

Alight Solutions 401(k) Index statistics for August 2020:

Index statistics	August	2020 YTD
Total transfers as percentage of starting balance	0.26%	2.57%
# Fixed days	19 (90%)	121 (72%)
# Equity days	2 (10%)	47 (28%)
# Above-normal days	1	37

Inflows and outflows during August:

Trading inflows mainly went to bond funds, stable value funds and self-directed brokerage windows
Outflows were primarily from large U.S. equity, mid U.S. equity and company stock funds

Asset classes with most trading inflows in August

	Percentage of inflows	Index dollar value ($ mil)
Bond funds	58%	$335
Stable value funds	27%	$155
Self-directed brokerage windows	8%	$49

Asset classes with most trading outflows in August

	Percentage of outflows	Index dollar value ($ mil)
Large U.S. equity funds	25%	$143
Mid U.S. equity funds	21%	$121
Company stock	21%	$120

August investment portfolios:

After reflecting market movements and trading activity, average asset allocation in equities increased from 65.9% in July to 66.6% in August
New contributions to equities decreased from 67.5% in July to 67.2% in August

Asset classes with largest percentage of total balance at end of August

	Percentage of balance	Index dollar value ($ mil)
Target date² funds	29%	$66,942
Large U.S. equity funds	26%	$60,095
Stable value funds	10%	$22,677

Asset classes with most contributions in August

	Percentage of contributions	Index dollar value ($ mil)
Target date funds	47%	$492
Large U.S. equity funds	20%	$213
International equity funds	7%	$73

August market observations:

Equity indices finished August with positive returns, while fixed income lost value for the first time this year. Large U.S. equities (represented by the S&P 500 Index) led, up +7.2%, followed by small U.S. equities (represented by the Russell 200 Index) and international equities (represented by the MSCI All Country World ex-U.S. Index), up +5.6% and +4.3%, respectively. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) fell -0.8%.

Returns for common indices

	August	2020 YTD
Bloomberg Barclays U.S. Aggregate Index	-0.8%	6.9%
S&P 500 Index	7.2%	9.7%
Russell 2000 Index	5.6%	-5.5%
MSCI All Country World ex-U.S. Index (net)	4.3%	-3.1%

Members of the media: please contact Landis Cullen for questions about the Alight Solutions 401(k) Index™. Learn more about the Alight Solutions 401(k) Index™ here.

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.
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.