May was the lightest month of trading activity for 401(k) investors in 2020, according to the Alight Solutions 401(k) Index™. On average, 0.018% of balances were traded daily—down from 0.023% in April and 0.078% in March. May had no above-normal1 days of trading activity.
May observations:
- On average, 0.018% of 401(k) balances were traded daily
- 13 of 20 days favored fixed income funds
Alight Solutions 401(k) Index statistics for May 2020:
| Index statistics | May | 2020 YTD |
|---|---|---|
| Total transfers as percentage of starting balance | 0.11% | 1.72% |
| # Fixed days | 13 (65%) | 65 (63%) |
| # Equity days | 7 (35%) | 38 (37%) |
| # Above-normal days | 0 | 32 |
Inflows and outflows during May:
- Trading inflows mainly went to bond funds, international equity and money market funds
- Outflows were primarily from target date2, large U.S. equity and company stock funds
Asset classes with most trading inflows in May
| Percentage of inflows | Index dollar value ($ mil) | |
|---|---|---|
| Bond funds | 31% | $73 |
| International equity funds | 23% | $53 |
| Money market funds | 19% | $44 |
Asset classes with most trading outflows in May
| Percentage of outflows | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 48% | $113 |
| Large U.S. equity funds | 28% | $65 |
| Company stock | 13% | $31 |
May investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities increased from 64.7% in April to 65.4% in May
- New contributions to equities remained at 67.2% from April through May
Asset classes with largest percentage of total balance at end of May
| Percentage of balance | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 29% | $61,582 |
| Large U.S. equity funds | 25% | $53,548 |
| Stable value funds | 11% | $22,608 |
Asset classes with most contributions in May
| Percentage of contributions | Index dollar value ($ mil) | |
|---|---|---|
| Target date funds | 46% | $513 |
| Large U.S. equity funds | 21% | $230 |
| International equity funds | 7% | $76 |
May market observations:
Continuing the trend from April, all followed benchmarks had positive returns for May. Small U.S. equity (represented by the Russell 2000 Index) rose 6.5%, large U.S. equity (represented by the S&P 500 Index) gained 4.8%, international equity (represented by the MSCI All Country World ex-U.S. Index) was up 3.3%, and U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) rising 0.5%.
Returns for common indices
| May | 2020 YTD | |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | 0.5% | 5.5% |
| S&P 500 Index | 4.8% | -5.0% |
| Russell 2000 Index | 6.5% | -16.0% |
| MSCI All Country World ex-U.S. Index (net) | 3.3% | -14.9% |
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.
