Participants July 17, 2018

Just One Above-Normal Trading Day in 401(k)s in June

According to the Alight Solutions 401(k) Index, year-to-date there have been 29 days with above-normal trading activity, suggesting that the month of June brought back a bit of a sense of tranquility for investors after a difficult start to the year.

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The June 2018 update of the Alight Solutions 401(k) Index shows just one day of above-normal trading activity during the month.

As June progressed, 401(k) investors continued movement away from equities, the index shows, with 13 of 21 days favoring fixed income funds. On average, a modest 0.013% of balances were traded daily.

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Year-to-date there have been 29 days with above-normal trading activity, suggesting that the month of June brought back a bit of a sense of tranquility for investors after a difficult start to the year. Other index data shows trading inflows mainly went to small U.S. equity, mid U.S. equity, and stable value funds, while outflows were primarily from target-date funds (TDFs), emerging markets, and international funds.

By asset class, small U.S. equity funds received the most inflows, netting 41% of the monthly inflow volume to the tune of $153 million. Midsized U.S. equity funds garnered 21% of the inflows ($78 million), and stable value funds received 17% of the flow ($64 million). On the flip side, 36% of the outflows ($133 million) came from target-date funds, 23% from emerging markets ($84 million), and 14% from international funds ($53 million). Important to note, target-date funds remain the most prevalent asset class in 401(k) plans, with 27% of the total market volume, according to the index.

At the end of June, asset allocation in equities were in line with May, with 68.5% of assets in equities. At the same time, 68.1% of new contributions were invested in equities at the end of June, up slightly from 68% in May.

The index update explains that domestic equities experienced slightly positive market returns for the month, with both large U.S. equities (represented by the S&P 500 Index) and small U.S. equities (represented by the Russell 2000 Index) up over 1%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) fell -0.1%, while the International equities (represented by the MSCI All Country World ex-U.S. Index) fell close to -2%.

Additional findings are available here.

Benefits July 17, 2018

HSA Owners Are Better Health Care Savers than the Average Consumer

According to an Alegeus study, HSA users are more likely to be well-versed on specific plan details and how to estimate and control the cost of care.

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A new Alegeus study identifies health savings account (HSA) owners as the savviest health care consumers. 

The study, which surveyed over 1,400 U.S. health care users, finds HSA participants are more well-versed in health care concepts compared to the general population. From interpreting specialized documents to understanding term language, these users are more likely to feel confident navigating throughout the system, with 39% suggesting they feel confident while deciphering health insurance details. Additionally, 34% say they feel confident examining plan details to determine health plan costs, 38% feel confident when reading terms for plan coverage, and 51% feel confident while analyzing important documents.  

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Twenty-five percent of HSA participants place an increased emphasis on cost reduction, 23% say they are likely to base decisions on costs, and 44% hold a confident attitude overall when anticipating out-of-pocket costs.

Concerning spending behavior, HSA participants are more practical than those not contributing to an HSA. These participants are more likely to research and compare costs before making a purchase (46%), determine prices before receiving services (43%), research the quality and effectiveness in a product or service (42%), and seek respective alternatives (37%).

The survey reveals only 13% of HSA participants have invested their account assets, and overall, accumulated account balances are relatively low, with only 11% of participants maxing out their HSA contributions. However, the survey shows 38% of participants recognize the need to contribute more, and therefore many say they plan to do so in the future. Even so, these consumers place larger emphasis in their savings, with 80% revealing they would save aggressively for health care costs. Sixty-eight percent have prepared a savings goal and 57% would likely allocate any unexpected extra funds towards health care savings. 

More information on the study can be found here.

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