Alight Solutions 401(k) Index™: May 2017 Observations

June 16, 2017

May was a slow month for trading in defined contribution plans, according to the Alight Solutions 401(k) Index™.

  • On average, 0.013% of balances traded each day, down from 0.015% in April
  • There were no days of above-normal1 trading
  • Equities were favored when investors made trades

Inflows and outflows:

  • 14 out of 22 trading days saw more inflows to equities
  • 56% of inflows went to international funds, consistent with April
  • Outflows were primarily company stock (33%) and stable value funds (27%)

 

Asset classes with most trading inflows in May

  Percentage of inflows Index dollar value
($ mil)
International funds 56% $179
Target-date2 funds 18% $57
Large U.S. equity funds 13% $41

 

Asset classes with most trading outflows in May

  Percentage of outflows Index dollar value
($ mil)
Company stock 33% $105
Stable value funds 27% $88
Small U.S. equity funds 14% $46
“Sell in May and go away? Not this year. Very few 401(k) investors traded in the month.”
Rob Austin Director of Research
Alight Solutions

Investment portfolios:

  • At the end of May, 66.9% of balances were in equities, up from 66.6% at the end of April
  • 67.2% of new contributions are in equities, up from 66.8% in April

 

Asset classes with largest percentage of total balance at end of May

  Percentage of balance Index dollar value
($ mil)
Target date funds 25% $47,125
Large U.S. equity funds 24% $44,650
Stable value funds 12% $21,917

 

Asset classes with most contributions in May

  Percentage of contributions Index dollar value
($ mil)
Target date funds 41% $463
Large U.S. equity funds 20% $231
International funds 9% $98

 

The Alight Solutions 401(k) Index™ statistics for the period ending May 31, 2017:

  May 2017 YTD
Total transfers as percentage of starting balance 0.17% 0.68%
# Fixed days 8 (36%) 48 (47%)
# Equity days 14 (64%) 55 (53%)
# Above normal1 days 0 2

 

Market observations
In May, capital markets saw mixed results. Year-to-date returns are still positive.

Returns for common indices

  May 2017 YTD
Bloomberg Barclays U.S. Aggregate Index 0.8% 2.4%
S&P 500 Index 1.4% 8.7%
Russell 2000 Index -2.0% 1.5%
MSCI All Country World ex-U.S. Index (net) 3.3% 13.7%

 

Members of the media: please contact MacKenzie Lucas for questions about the Alight Solutions 401(k) Index™.

  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 two times the average daily net activity of the preceding 12 months.
  2. Target date funds also include the amounts in target risk funds for companies who do not have target date funds. The amount in the target risk funds is less than 10% of the total.

 

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