Alight Solutions 401(k) Index™: Full Year 2019 Observations

A strong year on Wall Street saw 401(k) investors making small but steady trades from equities to fixed income, according to the Alight Solutions 401(k) Index™. Although 2019 had only 25 days of above-normal¹ daily transfer activity – much lower than 2018’s total of 46 days – the net trading activity was the highest Alight has seen since 2013, at 2.29%. All told, 86% of the trading days saw net trading activity move from equities to fixed income.

“In 2019, 401(k) investors largely took a more thoughtful and less reactionary approach to investing than in past years with an overwhelming trend of small trades away from equities to fixed income funds. This activity seems to suggest that people were rebalancing their portfolios, not making drastic changes to their investment mix. Heading into 2020, we encourage 401(k) investors to take this same, disciplined approach and keep long-term saving goals in mind rather than responding to market forces.” – Rob Austin, Head of Research at Alight Solutions

Asset classes with most trading inflows in 2019

	Percentage of inflows	Index dollar value ($ mil)
Bond funds	55%	$2,398
Stable value funds	27%	$1,157
Money market funds	13%	$547

Asset classes with most trading outflows in 2019

	Percentage of outflows	Index dollar value ($ mil)
Large U.S. equity funds	49%	$2,129
Company stock	34%	$1,457
Small U.S. equity funds	8%	$355

Asset classes with most contributions in 2019

	Percentage of contributions	Index dollar value ($ mil)
Target date² funds	47%	$7,091
Large U.S. equity funds	20%	$3,026
International funds	7%	$1,096

Percentage of balances by asset class

Asset class	Year end 2019	Year end 2018	Change
Money market	1.0%	1.2%	(-0.2%)
Stable value	9.5%	11.2%	(-1.7%)
Bond	7.9%	8.0%	(-0.1%)
Balanced	2.0%	2.1%	(-0.1%)
Target date funds	29.3%	28.0%	1.3%
Large cap U.S. equity	26.0%	24.1%	1.9%
Mid cap U.S. equity	4.8%	4.7%	0.1%
Small cap U.S. equity	2.9%	3.0%	(-0.1%)
International	6.5%	6.9%	(-0.4%)
Emerging markets	1.3%	1.3%	0.0%
Specialty/sector	0.4%	0.5%	(-0.1%)
Company stock	6.3%	6.9%	(-0.6%)
Self-directed brokerage	2.1%	2.1%	0.0%

Asset type	Year end 2019	Year end 2018	Change
Equity	68.1%	66.6%	1.5%
Fixed income	31.9%	33.4%	(-1.5%)

After reflecting contributions, trades, and market activity, 401(k) investors ended 2019 with 68.1% in equities, up from 66.6% at the beginning of the year.

Index statistics	2019
Total transfers as percentage of starting balance	2.29%
# Fixed days	216 (86%)
# Equity days	36 (14%)
# Above normal days	25

The following table shows the returns of major market indices for the year ending December 31, 2019:

Returns for common indices	2019
Bloomberg Barclays U.S. Aggregate Index	8.7%
S&P 500 Index	31.5%
Russell 2000 Index	25.5%
MSCI All Country World ex-U.S. Index (net)	21.5%

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