The Dow Jones Industrial Average and S&P 500 rose sharply during the fourth quarter — up over 16% and 7.5% respectively. This was in contrast to the previous three quarters of the year when all three major indices declined. The Nasdaq fell slightly in Q4, down less than 1%, as it had throughout most of the year in 2022. The primary factors behind these latest gains were the positive outlook on inflation, the hope that interest rates wouldn’t need to rise as high as previously expected, and the belief that the Chinese government would ease its “Zero COVID” policies. The AmericanTCS 401(k) Composite Benchmark posted a 7.03% gain for Q4, which was particularly noteworthy when compared to the performance of the major stock market indices. Although it trailed the Dow Jones, it was only slightly outperformed by the S&P 500. This strong performance is a testament to the effectiveness of a well-diversified retirement savings plan and highlights the potential for 401(k) plans to provide solid returns for investors. The benchmark’s gain in Q4 suggests both stocks and bonds in the U.S. economy were performing well, and investors in the benchmark were able to capitalize on this positive momentum. This is good news for 401(k) participants as they work toward their long-term financial goals. Despite the late-year rally, the hypothetical 401(k) investor still suffered a 16% decline for 2022, after a 5% decline in Q3 and an almost 13% decline in Q2. However, when we zoom out and look at a hypothetical 401(k) participant over a period of five years, the numbers look much better. During three of the last five years, the AmericanTCS 401(k) Benchmark has generated annual returns greater than 14%, with 2018 posting a -6% return, and 2022 with a -16.70% return.
ABOUT THE AmericanTCS 401(k) BENCHMARK AmericanTCS is a leading financial services organization that provides a wide array of brokerage, advisory, and trust services to a diverse national client base of financial advisors and institutions, asset managers, and benefits administrators through its various affiliated companies. Because we provide these services, AmericanTCS has plan investment data on over 100,000 401(k) plans representing approximately $120 billion in assets. In response to requests from our institutional clients, we have created the AmericanTCS Composite Benchmark. Using data from plans serviced by AmericanTCS with assets of at least $100,000 at the beginning and ending of the month, the AmericanTCS 401(k) Composite Benchmark is designed to reflect the portfolio performance across 401(k) plans serviced, in any capacity, by AmericanTCS. See the “Methodology” section of this report for details on how the composite benchmark is calculated.