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Alight Solutions 401(k) Index™: First Quarter 2020 observations

401(k) investors were very active traders in the first quarter of 2020, particularly when Wall Street was reeling as the world was coming to grips with the COVID-19 pandemic. There were 29 days of above-normal1 trading activity, the highest for a quarter since the Alight Solutions 401(k) Index™ started in 1997. Trading activity almost universally saw investors moving money from equity funds to fixed income with 98% of net trading inflows for the quarter going to stable value, money market and bond funds.

First quarter observations:

  • Net transfers for the quarter were 1.59% of balances — a level that is more than three times the average quarterly net trading activity for the past five years (0.50%) and the highest for a quarter since the third quarter of 2008
  • 43 out of 62 trading days in the first quarter had net trading dollars moving from equities to fixed income

 

Alight Solutions 401(k) Index™ statistics for Q1 2020 and year-to-date:

Index Statistics Q1 2020 2020 YTD
Net transfers as percentage of starting balance 1.59% 1.59%
# Fixed days 43 (69%) 43 (69%)
# Equity days 19 (31%) 19 (31%)
# Above-normal days 29 29

 

Asset classes with most trading inflows in Q1 2020

  Percentage of inflows Index dollar value ($ mil)
Stable value funds 49% $1,736
Bond funds 31% $1,095
Money market funds 18% $631

 

Asset classes with most trading outflows in Q1 2020

  Percentage of inflows Index dollar value ($ mil)
Target date2 funds 37% $1,326
Large U.S. equity funds 37% $1,324
Mid U.S. equity funds 8% $294

  

First quarter market observations:

Equity markets entered into bear market territory during the first quarter of 2020. Small U.S. equities (represented by the Russell 2000 Index) fell -30.6%, international equities (represented by the MSCI All Country World ex-U.S. Index) dropped -19.6%, and large U.S. equities (represented by the S&P 500) lost -19.6%. U.S. bonds (represented by the Bloomberg Barclays Aggregate Index) gained 3.2% for the quarter.

 

Returns for common indices Q1 2020 2020 YTD
Bloomberg Barclays U.S. Aggregate Index 3.2% 3.2%
S&P 500 Index -19.6% -19.6%
Russell 2000 Index -30.6% -30.6%
MSCI All Country World ex-U.S. Index (net) -23.4% -23.4%

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.


  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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