401(k) investors resumed trading into equities in the fourth quarter, according to the Alight Solutions 401(k) IndexTM. Twenty days in the quarter saw net trading activity move money from fixed income to equities—much higher than the six days in the third quarter. Overall net trading volume was light with 0.68% of balances traded (down from 0.92% in the third quarter).
Fourth quarter observations:
- All the days that favored equities were in November and December
- The 10 days of above-normal1 activity in the fourth quarter were more than the second and third quarter combined (2).
Alight Solutions 401(k) Index™ statistics for Q4 2020 and year-to-date:
| Index Statistics | Q4 2020 | 2020 YTD |
| Net transfers as percentage of starting balance | 0.68% | 3.51% |
| # Fixed days | 44 (69%) | 184 (73%) |
| # Equity days | 20 (31%) | 69 (27%) |
| # Above-normal days | 10 | 47 |
Asset classes with most trading inflows in Q4 2020
| Percentage of inflows | Index dollar value ($ mil) | |
| Bond funds | 55% | $849 |
| Stable value funds | 36% | $546 |
| Money market funds | 5% | $70 |
Asset classes with most trading outflows in Q4 2020
| Percentage of outflows | Index dollar value ($ mil) | |
| Large U.S. equity funds | 37% | $572 |
| Company stock | 23% | $348 |
| Mid U.S. equity funds | 10% | $147 |
Fourth quarter market observations:
The fourth quarter was positive across all observed indices. Small U.S. equities (represented by the Russell 2000 Index) rose 31.4%, international equities (represented by the MSCI All Country World ex-U.S. Index) grew 17.0%, and large U.S. equities (represented by the S&P 500 Index) gained 12.2%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) also rose 0.7%.
|
Q4 2020 | 2020 YTD | |
| Bloomberg Barclays U.S. Aggregate Index | 0.7% | 7.5% | |
| S&P 500 Index | 12.2% | 18.4% | |
| Russell 2000 Index | 31.4% | 20.0% | |
| MSCI All Country World ex-U.S. Index (net) | 17.0% | 10.7% |
Members of the media: please contact Landis Cullen for questions about the Alight Solutions 401(k) Index™.
- 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
