Alight Solutions 401(k) Index™: Fourth Quarter 2020 Observations

401(k) investors resumed trading into equities in the fourth quarter, according to the Alight Solutions 401(k) Index^TM. Twenty days in the quarter saw net trading activity move money from fixed income to equities—much higher than the six days in the third quarter. Overall net trading volume was light with 0.68% of balances traded (down from 0.92% in the third quarter).

Fourth quarter observations:

All the days that favored equities were in November and December
The 10 days of above-normal¹ activity in the fourth quarter were more than the second and third quarter combined (2).

Alight Solutions 401(k) Index™ statistics for Q4 2020 and year-to-date:

Index Statistics	Q4 2020	2020 YTD
Net transfers as percentage of starting balance	0.68%	3.51%
# Fixed days	44 (69%)	184 (73%)
# Equity days	20 (31%)	69 (27%)
# Above-normal days	10	47

Asset classes with most trading inflows in Q4 2020

	Percentage of inflows	Index dollar value ($ mil)
Bond funds	55%	$849
Stable value funds	36%	$546
Money market funds	5%	$70

Asset classes with most trading outflows in Q4 2020

	Percentage of outflows	Index dollar value ($ mil)
Large U.S. equity funds	37%	$572
Company stock	23%	$348
Mid U.S. equity funds	10%	$147

Fourth quarter market observations:

The fourth quarter was positive across all observed indices. Small U.S. equities (represented by the Russell 2000 Index) rose 31.4%, international equities (represented by the MSCI All Country World ex-U.S. Index) grew 17.0%, and large U.S. equities (represented by the S&P 500 Index) gained 12.2%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) also rose 0.7%.

Returns for common indices

Q4 2020

2020 YTD

Bloomberg Barclays U.S. Aggregate Index

0.7%

7.5%

S&P 500 Index

12.2%

18.4%

Russell 2000 Index

31.4%

20.0%

MSCI All Country World ex-U.S. Index (net)

17.0%

10.7%

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