Participants August 19, 2020

401(k) Investors Light on Trades in July

The movement from equities to fixed income continues, according to the Alight Solutions 401(k) Index.

Reported by

401(k) investors hardly touched their accounts in July, with an average of a mere 0.021% of 401(k) balances traded daily, according to the Alight Solutions 401(k) Index.

Twenty out of 22 trading days favored fixed income funds, continuing the pattern observers have seen all this year, with 401(k) investors, year-to-date, favoring fixed income funds for a total of 102 days, and equities, 45 days.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

During July, total transfers as a percentage of starting balance averaged 0.36% of 401(k) investors’ accounts. Year-to-date, that is 2.31%.

Alight notes that trading inflows mainly went to bond, stable value and money market funds during July, with outflows primarily from large U.S. equity, target-date and mid U.S. equity funds.

Asset classes with the most trading inflows in July were bond funds, taking in 53% of the inflows, valued at $419 million, followed by stable value funds (33%; $257 million) and money market funds (12%; $91 million).

Asset classes with the most trading outflows in July were large U.S. equity funds (43%; $338 million), target-date funds (TDFs) (23%; $184 million) and mid U.S. equity funds (12%; $91 million).

After reflecting market movements and trading activity, average asset allocation in equities increased ever so slightly from 65.6% in July to 65.9% in July. New contributions to equities remained steady at 67.5%.

Asset classes with the largest percentage of total balance at the end of July were TDFs (29%; $65.1 billion), large U.S. equity funds (25%; $56.9 billion) and stable value funds (10%; $22.8 billion).

Asset classes with the most contributions in July were TDFs (46%; $569 million), large U.S. equity funds (21%; $255 million) and international equity funds (7%; $87 million).

During the month, large U.S. equities were up 5.6%, international equities gained 4.5%, small U.S. equities were up 2.8% and U.S. bonds rose 1.5%.

Products August 19, 2020

Rebalance Builds 401(k) Product Aimed at Small Businesses

The tool offers investment strategies geared toward each plan participant. 

Reported by

Investment firm Rebalance has launched Better K, a 401(k) product designed to take the firm’s approach to wealth management and apply it to retirement planning for small business owners and their employees.

Better K provides each plan participant an investment strategy based on his own, personal needs. Each participant is provided a personalized risk assessment, and the results are used to select the optimal retirement portfolio for each participant.

Get more!  Sign up for PLANSPONSOR newsletters.

“Our experience over the past decade of working with individual investors is the impetus for developing Better K,” Rebalance Managing Director Mitchell Tuchman said in a statement. “Time and time again, clients have come to us with 401(k) plans from previous employers that clearly weren’t developed with their best interest in mind. While many companies offer 401(k) plans to their employees, they provide no guidance or investment education. Employees are left to their own devices to select from a laundry list of investment options with no support from a professional financial planner or investment manager.”  

Better K aims to cut fees for plan participants and administrators, as well as liability for small business owners. Because Rebalance assumes the role as an investment adviser to the plan, it is also assuming most of the fiduciary responsibilities, thereby reducing a business owner’s liability exposure. 

“Small businesses often get punished when it comes to options and fees associated with traditional 401(k) plans,” continued Tuchman. “With Better K, small business owners and their employees can reduce their annual 401(k) fees by up to 50%. Not only that, at a time when more employers are getting sued over fiduciary issues related to their 401(k) plan, the added feature of greatly reduced legal risk to the business owner is a huge benefit.” 

In partnership with EPIC Retirement Plan Services, Better K by Rebalance provides plan participants with 24/7 access to their accounts. Participants can access their account via a mobile app, website or multilingual telephone support.

«