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Alight Solutions 401(k) Index™: November 2020 Observations

Alight Solutions 401(k) Index™: November 2020 Observations

With the S&P 500 posting its best November ever, 401(k) investors resumed trading into equities, according to the Alight Solutions 401(k) IndexTM. There were nine days in November where net trades went from fixed income to equities—a sharp contrast from October that had no such days. Overall, investors had 66.9% of balances in equities at the end of November, the highest value since January 2020 before the COVID-19 pandemic.

November observations:

  • On average, 0.024% % of 401(k) balances were traded daily
  • 11 of 20 days favored fixed income funds
  • 3 above-normal1 days of trading activity
Alight Solutions 401(k) Index statistics for November 2020:
Index statistics November 2020 YTD
Total transfers as percentage of starting balance 0.16% 3.51%
# Fixed days 11 (55%) 173 (75%)
# Equity days 9 (45%) 58 (25%)
# Above-normal days 3 47
 

Inflows and outflows during November:

  • Trading inflows mainly went to bond, stable value and target date2 funds
  • Outflows were primarily from company stock, large U.S. equity and balanced funds
Asset classes with most trading inflows in November
  Percentage of inflows Index dollar value ($ mil)
Bond funds 61% $219
Stable value funds 19% $66
Target date funds 8% $28
Asset classes with most trading outflows in November
  Percentage of outflows Index dollar value ($ mil)
Company stock 47% $167
Large U.S. equity funds 20% $72
Balanced funds 13% $46
 

November investment portfolios:

  • After reflecting market movements and trading activity, average asset allocation in equities increased from 65.4% in October to 66.9% in November
  • New contributions to equities increased from 67.2% in October to 67.3% in November
Asset classes with largest percentage of total balance at end of November
  Percentage of balance Index dollar value ($ mil)
Target date funds 29% $69,800
Large U.S. equity funds 25% $61,144
Stable value funds 10% $22,969
Asset classes with most contributions in November
  Percentage of contributions Index dollar value ($ mil)
Target date funds 47% $479
Large U.S. equity funds 20% $204
International equity funds 7% $72
 

November market observations:

All indices gained in November with all equities reaching double digit returns. U.S. small equity (represented by the Russell 2000 Index) up 18.4%, international equity (represented by the MSCI All Country World ex-U.S. Index) rose 13.5%, and U.S. large equity (represented by the S&P 500 Index) up 11.0%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) also gained 1.0%.

Returns for common indices
  November 2020 YTD
Bloomberg Barclays U.S. Aggregate Index 1.0% 7.4%
S&P 500 Index 11.0% 14.0%
Russell 2000 Index 18.4% 10.4%
MSCI All Country World ex-U.S. Index (net) 13.5% 5.0%

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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