As stock markets posted their largest August gain in over 35 years, 401(k) investors were light traders according to the Alight Solutions 401(k) IndexTM. There was one day of above-normal1 trading activity and three days of low trading activity. When trades occurred, people traded from equities to fixed income.
August observations:
- On average, 0.016% of 401(k) balances were traded daily
- 19 of 21 days favored fixed income funds
Alight Solutions 401(k) Index statistics for August 2020:
| Index statistics | August | 2020 YTD |
|---|---|---|
| Total transfers as percentage of starting balance | 0.26% | 2.57% |
| # Fixed days | 19 (90%) | 121 (72%) |
| # Equity days | 2 (10%) | 47 (28%) |
| # Above-normal days | 1 | 37 |
Inflows and outflows during August:
- Trading inflows mainly went to bond funds, stable value funds and self-directed brokerage windows
- Outflows were primarily from large U.S. equity, mid U.S. equity and company stock funds
Asset classes with most trading inflows in August
| Percentage of inflows | Index dollar value ($ mil) | |
|---|---|---|
| Bond funds | 58% | $335 |
| Stable value funds | 27% | $155 |
| Self-directed brokerage windows | 8% | $49 |
Asset classes with most trading outflows in August
| Percentage of outflows | Index dollar value ($ mil) | |
|---|---|---|
| Large U.S. equity funds | 25% | $143 |
| Mid U.S. equity funds | 21% | $121 |
| Company stock | 21% | $120 |
August investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities increased from 65.9% in July to 66.6% in August
- New contributions to equities decreased from 67.5% in July to 67.2% in August
Asset classes with largest percentage of total balance at end of August
| Percentage of balance | Index dollar value ($ mil) | |
|---|---|---|
| Target date2 funds | 29% | $66,942 |
| Large U.S. equity funds | 26% | $60,095 |
| Stable value funds | 10% | $22,677 |
Asset classes with most contributions in August
| Percentage of contributions | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 47% | $492 |
| Large U.S. equity funds | 20% | $213 |
| International equity funds | 7% | $73 |
August market observations:
Equity indices finished August with positive returns, while fixed income lost value for the first time this year. Large U.S. equities (represented by the S&P 500 Index) led, up +7.2%, followed by small U.S. equities (represented by the Russell 200 Index) and international equities (represented by the MSCI All Country World ex-U.S. Index), up +5.6% and +4.3%, respectively. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) fell -0.8%.
Returns for common indices
| August | 2020 YTD | |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | -0.8% | 6.9% |
| S&P 500 Index | 7.2% | 9.7% |
| Russell 2000 Index | 5.6% | -5.5% |
| MSCI All Country World ex-U.S. Index (net) | 4.3% | -3.1% |
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.
