401(k) plan investors remained light traders during August’s rising and falling of stocks, according to the Alight 401(k) IndexTM. While there were two above-normal1 trading days—the first since mid-June—the net trades as a percent of balance (0.07%) reflected the second lowest month in the more than 20-year history of the Alight 401(k) IndexTM. This is mainly because traders favored equities in the beginning of the month as stocks were gaining, but they favored fixed income funds as Wall Street had sell-offs in the second half of the month. Overall, bond funds topped inflows (50%), while most outflows were from target date funds2 (37%).
August observations:
- On average, 0.009% of 401(k) balances were traded daily.
- 13 of 23 days favored equity funds.
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The Alight Solutions 401(k) IndexTM statistics for the month of August: |
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|
Index statistics |
August |
2022 YTD |
|
Total transfers as percentage of starting balance |
0.07% |
0.91% |
|
# Fixed days |
10 (43%) |
116 (69%) |
|
# Equity days |
13 (57%) |
51 (31%) |
|
# Above-normal1 days |
2 |
35 |
Inflows and outflows during the month of August:
- Trading inflows mainly went to bond, large U.S. equity and international equity funds.
- Outflows were primarily from target date2, stable value and mid U.S. equity funds.
|
Asset classes with most trading inflows in August |
Percentage of inflows |
Index dollar value ($mil) |
|
Bond funds |
50% |
$78 |
|
Large U.S. equity funds |
36% |
$57 |
| International equity funds |
8% |
$13 |
|
Asset classes with most trading outflows in August |
Percentage of outflows |
Index dollar value($mil) |
|
Target date funds2 |
37% |
$58 |
|
Stable value funds |
25% |
$40 |
|
Mid U.S. equity funds |
14% |
$22 |
August investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities decreased from 68.6% in July to 68.3% in August.
- New contributions to equities remained at 68.5% from July through August.
|
Asset classes with largest percentage |
Percentage of balance |
Index dollar value ($mil) |
|
Target date funds2 |
30% |
$66,712 |
|
Large U.S. equity funds |
26% |
$58,765 |
|
Stable value funds |
10% |
$21,444 |
|
Asset classes with most contributions in August |
Percentage of contributions |
Index dollar value($mil) |
|
Target date funds2 |
50% |
$536 |
|
Large U.S. equity funds |
21% |
$222 |
|
International equity funds |
7% |
$72 |
August market observations:
|
Returns for common indices |
August |
2022 YTD |
|
Bloomberg Barclays U.S. Aggregate Index |
-2.83% |
-10.75 % |
|
S&P 500 Index |
-4.08 % |
-16.14 % |
|
Russell 2000 Index |
-2.05 % |
-17.16 % |
|
MSCI All Country World ex-U.S. Index (net) |
-3.22% |
-18.34 % |
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 2 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.
