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Brisk Second Quarter Rebound for the Mid Atlantic Trust Company 401(k) Benchmark

After a rocky end to the first quarter of 2020 across the markets, the second quarter offered a brisk bounce back for investments and that performance can be seen in the Mid Atlantic Trust Company 401(k) Benchmark. The benchmark, which reflects the portfolio performance across 401(k) plans serviced by the company, finished the second quarter up 15.48% for the three months ending June 30, 2020, and now stands at a -3.14% year to date return for 2020.

The performance to date for the 401(k) Benchmark in 2020 mirrors the swings in the major market indices in recent months, as investors react to trials and tribulations around the world of how to deal with the Coronavirus pandemic. These swings have included an all-time high for many of major indices six weeks into the year, followed by a retreat of almost 35% in value over the following six weeks, only to then rally back over the second quarter at a pace that hasn’t been seen in over 30 years. For the hypothetical 401(k) participant*, however, the benchmark shows that their retirement plan statement at the end of June would show their balance to be 99% of where it stood on December 31, 2019 — essentially unchanged and a true testament as to why experts recommend 401(k) participants to “stay the course” even during turbulent markets.

2Q20 Year-to-Date
Nasdaq Composite (Principal Return) 30.63 12.11
S&P 500 20.54 ‑3.08
Dow Jones Industrial Average 18.51 ‑8.43
Mid Atlantic Trust Co. 401(k) Benchmark 15.48 -3.14

While the performance of the market has whipsawed back and forth throughout the year, asset allocation has remained fairly constant within the Mid Atlantic Trust Company 401(k) Benchmark. U.S. Stock holdings, which dropped from 57% of holdings coming into 2020 down to 52% by the end of the first quarter, ticked up slightly to 53% of holdings by the end of the second quarter. That slight shift in allocation towards U.S. Stocks came from U.S. bond market holdings, which dropped from 20% down to 19% for the second quarter.

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. Data used for this benchmark uses approximately 31,000 of those plans (see fact sheet for further information on actual sample). 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.

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 shervoyavich@macg.com.

* 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.

Mid Atlantic 401(k) Benchmark Reflects COVID-19 Impact on Retirement Savings of Americans

 

The Mid Atlantic Trust Company 401(k) Benchmark, which reflects the portfolio performance across 401(k) plans serviced by the company, finished the first quarter of 2020 with a -16.12% trailing return. The 16.12% decline for the quarter comes on the heels of a 6.13% return for the fourth quarter of 2019 and an overall return of 21.24% for the calendar year 2019.

The performance of the 401(k) Benchmark is in line with the trajectory of the major market indices amidst the world’s response to the Coronavirus pandemic. Six weeks into 2020 all of the major indices reached all-time highs, but quickly retreated from those lofty levels during March as the economic impact of the pandemic began to take hold. The Dow Jones Industrial Average (DJIA) posted a drop of -23.2% for the first quarter, its worst quarter since the fourth quarter of 1987. The S&P 500 posted a -20% change for the quarter — its worst overall quarter since the fourth quarter of 2008. The NASDAQ Composite Index finished the first quarter of 2020 posting a -14.18% return, its worst since 2018.

Index Returns 1Q2020
DJIA -23.2%
S&P 500 -20.0%
MATC 401(k) Benchmark -16.12%
NASDAQ – 14.18%
10-Yr Treasury Yield – 1.18%

As the equity market performance shifted in the first quarter of 2020, the shift in asset allocation across 401(k) plans is reflected in the 401(k) Benchmark. The allocation of U.S. Stock holdings dropped from 57% of holdings at the end of Q4 2019 down to 52% at the end of Q1 2020. Non-U.S. stocks stood firm at 18% in a quarter-over-quarter comparison, while Cash, U.S. Bonds and Non-U.S. Bond holdings saw an uptick in total holdings.

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. Data used for this benchmark uses approximately 31,000 of those plans (see fact sheet for further information on actual sample).  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.

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 shervoyavich@macg.com