401(k) Balances Returned to Positive Territory for 2020

October 3, 2020


After a rollercoaster performance across the 1st half of 2020, the Mid Atlantic Trust Company 401(k) Benchmark delivers a second straight positive quarterly return, which means the hypothetical 401(k) investor now has a positive YTD return for 2020.

Following up on a return of over 15% in the second quarter of 2020, the Mid Atlantic Trust Company 401(k) Benchmark continued its momentum in the third quarter and tipped the year-to-date return for the hypothetical 401(k) participant* into positive territory. The benchmark, which reflects the portfolio performance across 401(k) plans serviced by the company, finished the second quarter up 6.05% for the three months ending September 30, 2020, and now stands at a 2.72% year-to-date return for 2020.

Just like the ups and downs we have experienced in all aspects of our lives throughout 2020, the performance for the 401(k) Benchmark in 2020 has been like a rollercoaster. Out of the gate for the year, the Benchmark saw a 16% dip in the first quarter, and even after an over 15% return in the second quarter, the hypothetical investor was still starring at a negative balance halfway through the year. Even with a market pullback during the month of September, the third quarter delivered enough of a return for the hypothetical investor to see a positive year-to-date return in their accounts — a true testament as to why experts recommend 401(k) participants “stay the course” even during the most turbulent markets.

3Q20 Year-to-Date
Nasdaq Composite (Principal Return) 11.02 24.46
S&P 500 8.93 5.57
Mid Atlantic Trust Co. 401(k) Benchmark 6.05 2.72
Dow Jones Industrial Average 7.63 ‑2.65

In terms of asset allocation within the Mid Atlantic Trust Company 401(k) Benchmark, U.S. Stock holdings continued to climb, down from a low of 52% of holdings at the end of the first quarter, up to 54% at the end of the third quarter. This is still below where U.S. Stocks stood coming into the year when they represented 57% of holdings. That allocation shift towards U.S. Stocks has continued to come from U.S. bond market holdings, which stood at 18% at the end of the third quarter, down from 20% at the end of the first quarter.

Mid Atlantic Trust Company 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 subsidiary companies.  Because we provide these services, Mid Atlantic Trust Company 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 Mid Atlantic Trust Company 401(k) Composite Benchmark. Using data from plans serviced by Mid Atlantic Trust Company with assets of at least $100,000 at the beginning and ending of the month, the Mid Atlantic Trust Company 401(k) Composite Benchmark is designed to reflect the portfolio performance across 401(k) plans serviced, in any capacity, by Mid Atlantic. See the “Methodology” section of this report for details on how the composite benchmark is calculated.  
* For the hypothetical participant balances, we used a starting balance based on the average 401(k) participant balance provided by the Investment Company Institute for the Year of the starting balance. In our calculation, we assumed a starting annual salary of $50,000, a combined employee/employer 9% annual contribution rate, and a 3% annual salary increase and applied the monthly rate of return of the Benchmark.