For the first quarter of 2021, the Mid Atlantic Trust Company 401(k) Benchmark produced a positive return of 3.69%. This is the fourth consecutive quarter with positive returns for the Benchmark, bringing the total 12-month return up to 41.97% and the hypothetical participant* balance up to $152,891.
Looking back one year ago to the end of the first quarter for 2020, the hypothetical 401(k) investor that the Benchmark tracks saw a negative return of -16.12% as the COVID-19 pandemic took hold across the United States. Since that time, the benchmark has rebounded, producing quarterly returns of 15.48% in 2Q20, 6.05% in 3Q20, 11.80% in 4Q20 and now an additional 3.69% in 1Q21. This brought the balance for the hypothetical 401(k) investor over the $150,000 level during the quarter, marking a doubling of the balance over the past 5 years. This serves as a reminder as to why experts recommend 401(k) participants “stay the course” even during the most turbulent markets.
In comparison to the major market indices, the Mid Atlantic Trust Company 401(k) Benchmark was outpaced in the first quarter by the Dow Jones (7.76%) and the S&P 500 (6.17%). The Nasdaq Composite, which delivered a blistering 43.6% return for 2020 and over 72% over the past twelve months, cooled off in the first quarter with a 2.78% return as many tech stocks that comprise the index were under pressure for much of the quarter.
|First Quarter 2021 Comparison with Major Indices||2Q20||3Q20||4Q20||1Q21||12-Mo. Return|
|Dow Jones Industrial Average||15.48||7.63||10.20||7.76||53.78|
|Mid Atlantic Trust Co. 401(k) Benchmark||15.48||6.05||11.80||3.69||41.97|
|Nasdaq Composite (Principal Return)||30.63||11.02||15.70||2.78||72.04|
|Effective Fed Funds Rate||0.05||0.09||0.09||0.09||0.07|
|S&P U.S. Treasury Bond Current 10-Year Index||-6.96||-8.2%|
In terms of asset allocation, US Stocks continued to take up a greater share of the pie, increasing from 57% of 401(k) holdings at the end of 2020 to 60% at the end of March 2021. That shift came at the expense of bonds — both US bonds, which dropped from 19% to 17% of assets and Non-US Bonds which dropped from 3% to 2%. Cash holdings increased from 4% to 5%.
ABOUT THE MID ATLANTIC 401(k) BENCHMARK
Mid Atlantic Capital Group 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 approximately 95,000 401(k) plans representing approximately $100 billion in assets. In response to requests from our institutional clients, we have created the Mid Atlantic Trust Company 401(k) Composite Benchmark which 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 a copy of the full report of the Mid Atlantic Trust Company 401(k) Composite Benchmark, click here.
Contact Mr. Scott Hervoyavich of Mid Atlantic Trust Company at 800-693-7800 or by emailing him at firstname.lastname@example.org
* 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.