Investors in 401(k) plans were light traders in July, according to the Alight Solutions 401(k) IndexTM. When trades happened, people tended to keep market gains by trading from equities to fixed income. There was one day of above-normal1 activity.
July observations:
- On average, 0.021% of 401(k) balances were traded daily
- 20 of 22 days favored fixed income funds
Alight Solutions 401(k) Index statistics for July 2020:
| Index statistics | July | 2020 YTD |
|---|---|---|
| Total transfers as percentage of starting balance | 0.36% | 2.31% |
| # Fixed days | 20 (91%) | 102 (69%) |
| # Equity days | 2 (9%) | 45 (31%) |
| # Above-normal days | 1 | 36 |
Inflows and outflows during July:
- Trading inflows mainly went to bond, stable value and money market funds
- Outflows were primarily from large U.S. equity, target date2 and mid U.S. equity funds
Asset classes with most trading inflows in July
| Percentage of inflows | Index dollar value ($ mil) | |
|---|---|---|
| Bond funds | 53% | $419 |
| Stable value funds | 33% | $257 |
| Money market funds | 12% | $91 |
Asset classes with most trading outflows in July
| Percentage of outflows | Index dollar value ($ mil) | |
|---|---|---|
| Large U.S. equity funds | 43% | $338 |
| Target date funds | 23% | $184 |
| Mid U.S. equity funds | 12% | $91 |
July investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities increased from 65.6% in June to 65.9% in July
- New contributions to equities remained at 67.5%
Asset classes with largest percentage of total balance at end of July
| Percentage of balance | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 29% | $65,065 |
| Large U.S. equity funds | 25% | $56,935 |
| Stable value funds | 10% | $22,830 |
Asset classes with most contributions in July
| Percentage of contributions | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 46% | $569 |
| Large U.S. equity funds | 21% | $255 |
| International equity funds | 7% | $87 |
July market observations:
Positive returns continued in July across all followed indices. Large U.S. equities (represented by the S&P 500 Index) rose 5.6%, international equities (represented by the MSCI All Country World ex-U.S. Index) gained 4.5%, and small U.S. equities (represented by the Russell 2000 Index) were up 2.8%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) rose 1.5%.
Returns for common indices
| July | 2020 YTD | |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | 1.5% | 7.7% |
| S&P 500 Index | 5.6% | 2.4% |
| Russell 2000 Index | 2.8% | -10.6% |
| MSCI All Country World ex-U.S. Index (net) | 4.5% | -7.0% |
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.
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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.
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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.
