As the S&P 500 was posting its best quarterly performance since 1998, 401(k) investors were light traders according to the Alight Solutions 401(k) Index™. There were only six days of above-normal1 trading activity—a sharp decline from the 29 above-normal days in the first quarter. When investors made trades, they tended to move money from equities to fixed income.
Second quarter observations:
- Net transfers for the quarter were 0.50% of balances
- 39 out of 63 trading days in the second quarter had net trading dollars moving from equities to fixed income
Alight Solutions 401(k) Index™ statistics for Q2 2020 and year-to-date:
| Index Statistics | Q2 2020 | 2020 YTD |
|---|---|---|
| Net transfers as percentage of starting balance | 0.50% | 1.96% |
| # Fixed days | 39 (62%) | 82 (66%) |
| # Equity days | 24 (38%) | 43 (34%) |
| # Above-normal days | 6 | 35 |
Asset classes with most trading inflows in Q2 2020
| Percentage of inflows | Index dollar value ($ mil) | |
|---|---|---|
| Bond funds | 51% | $488 |
| Money market funds | 15% | $146 |
| Stable value funds | 13% | $127 |
Asset classes with most trading outflows in Q2 2020
| Percentage of outflows | Index dollar value ($ mil) | |
|---|---|---|
| Target date2 funds | 37% | $355 |
| Large U.S. equity funds | 37% | $352 |
| Company stock | 17% | $162 |
Second quarter market observations:
The second quarter provided a respite and recovery from the first quarter’s decline, with all indices gaining. Small U.S. equities (represented by the Russell 2000 Index) rose 25.4%, large U.S. equities (represented by the S&P 500) gained 20.5%, and international equities (represented by the MSCI All County World ex-U.S. Index) up 16.1%. Additionally, U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) gained 2.9%.
| Returns for common indicies | Q2 2020 | 2020 YTD |
|---|---|---|
| Bloomberg Barclays U.S. Aggregate Index | 2.9% | 6.1% |
| S&P 500 Index | 20.5% | -3.1% |
| Russell 2000 Index | 25.4% | -13.0% |
| MSCI All Country World ex-U.S. Index (net) | 16.1% | -11.0% |
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.
- 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
- 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.
