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

Slow but steady 401(k) trading created an uptick in net trading activity for the quarter. According to the Alight Solutions 401(k) Index^TM, the total net transfers as a percentage of balances increased from 0.50% of balances in the second quarter to 0.92% of balances in the third quarter even though there were only two days of above-normal¹ activity. Almost all days saw net trading activity out of equities and into fixed income funds.

Third quarter observations:

Net transfers for the quarter were 0.92% of balances
58 out of 64 trading days in the third quarter had net trading dollars moving from equities to fixed income

Alight Solutions 401(k) Index™ statistics for Q3 2020 and year-to-date:

Index Statistics	Q3 2020	2020 YTD
Net transfers as percentage of starting balance	0.92%	2.85%
# Fixed days	58 (91%)	140 (74%)
# Equity days	6 (9%)	49 (26%)
# Above-normal days	2	37

Asset classes with most trading inflows in Q3 2020

	Percentage of inflows	Index dollar value ($ mil)
Bond funds	54%	$1,077
Stable value funds	32%	$644
Money market funds	9%	$183

Asset classes with most trading outflows in Q3 2020

	Percentage of outflows	Index dollar value ($ mil)
Large U.S. equity funds	37%	$738
Target date² funds	16%	$316
Mid U.S. equity funds	15%	$305

Third quarter market observations:

Markets saw improvements in Q3. Large U.S. equities (represented by the S&P 500 Index) rose 8.9%, international equities (represented by the MSCI All Country World ex-U.S. Index) were up 6.3% and small U.S. equities (represented by the Russell 2000 Index) gained 4.9%. U.S. bonds (represented by Bloomberg Barclays U.S. Aggregate Index) were also in the black for the quarter.

Returns for common indices

Q3 2020

2020 YTD

Bloomberg Barclays U.S. Aggregate Index

0.6%

6.8%

S&P 500 Index

8.9%

5.6%

Russell 2000 Index

4.9%

-8.7%

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

6.3%

-5.4%

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.

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. The amount in the target risk funds is less than 10% of the total.