Alight Solutions 401k Index: Full Year 2018 Observations

According to the Alight Solutions 401(k) Index^™, 2018 was an interesting year for trading activity among 401(k) investors. On the one hand, participants were very active during the year, with 46 days of above-normal¹ daily transfer activity--the highest number of above-normal days in the last five years, much higher than the 13 days of above-normal trading in 2017. On the other hand, net trades in 2018 amounted to only 1.42% of total plan balances, making 2018 a record low year for trading activity in the over 20-year history of the Index.

This apparent discrepancy is attributed to the fact that many of the high trading activity days were concentrated around the beginning of the year and toward the end of the year, with the trades moving in opposite directions. Investors started the year in January with a rush to equities. The first seven trading days of the year and 18 of the first 28 trading days were above-normal with nearly universal movement from fixed income investments to equity funds. However, investors reversed this trend in December when Wall Street plummeted. During the seven-day stretch when the Dow dropped by at least 350 points six times, every day was an above-normal day with money flowing from equities to fixed income. In essence, these trades canceled out the actions from the beginning of the year.

Asset classes with most trading inflows in 2018

	Percentage of inflows	Index dollar value ($ mil)
Stable value funds	56%	$1,628
Money market funds	19%	$542
Bond funds	13%	$392

Asset classes with most trading outflows in 2018

	Percentage of outflows	Index dollar value ($ mil)
Target date funds²	36%	$1,545
Company stock	22%	$648
Large U.S. equity funds	13%	$368

Asset classes with most contributions in 2018

	Percentage of contributions	Index dollar value ($ mil)
Target date funds	46%	$6,566
Large U.S. equity funds	20%	$2,823
International funds	8%	$1,149

Percentage of balances by asset class

	Year end 2018	Year end 2017	Change
Money market	1.2%	1.1%	0.15%
Stable value	11.2%	10.1%	1.1%
Bond	8.0%	7.5%	0.5%
Balanced	2.1%	2.3%	(-0.2%)
Target date funds	28.0%	27.2%	0.8%
Large cap U.S. equity	24.1%	23.8%	0.3%
Mid cap U.S. equity	4.7%	5.2%	(-0.5%)
Small cap U.S. equity	3.0%	3.2%	(-0.2%)
International	6.9%	8.1%	(-1.2%)
Emerging markets	1.3%	0.7%	0.6%
Specialty/sector	0.5%	0.6%	(-0.1%)
Company stock	6.9%	8.2%	(-1.3%)
Self-directed brokerage	2.1%	2.0%	0.1%

Asset type	Year end 2018	Year end 2017	Change
Equity	66.6%	68.6%	(-2.0%)
Fixed income	33.4%	31.4%	2.0%

After reflecting contributions, trades, and market activity, 401(k) investors ended 2018 with 66.6% in equities, down from 68.6% at the beginning of the year.

Index statistics	2018
Total transfers as percentage of starting balance	1.42%
# Fixed days	155 (62%)
# Equity days	96 (38%)
# Above normal days	46

The following table shows the returns of major market indices for the year ending December 31, 2018:

Returns of common indices	2018
Bloomberg Barclays Capital U.S. Aggregate Index	0.0%
S&P 500 Index	-4.4%
Russell 2000 Index	-11.0%
MSCI All Country World ex-U.S.A. Index (net)	-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.

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 for companies who do not have target date funds. The amount in the target risk funds is less than 10% of the total.