401(k) Participants Do a Trading About-Face in August

GIC/stable value, money market, and bond funds saw the most inflows over the month.

Large losses on Wall Street caused a brief burst of trading activity in August, according to the Aon Hewitt 401(k) Index.

Although August experienced only two days of above-normal trading activity, they occurred on days with some of the biggest stock retreats in recent memory.

On Friday, August 21, while equities were off by about 3%, trading activity was approximately twice the normal level. On Monday, August 24, as stocks plunged further, the 401(k) Index had the highest trading day since 2011–approximately seven times normal trading levels.

In August, an average of 0.026% of total balances transferred. This was slightly higher than the averages for July (0.021%) and June (0.024%) but less than May’s average of 0.031%.

GIC/stable value ($222 million), money market ($104 million), and bond funds ($43 million) saw the most inflows over the month. The most common classes for outflows were target-date funds ($227 million), small U.S. equity ($42 million), and international funds ($33 million). Target-date funds ($346 million) continued to receive the majority of new contributions into individuals’ accounts.

When combining contributions, trades, and market activity, participants’ overall allocation to equities declined in August to 65.4%, from 66.4% in July. Future contributions to equities remained at 66.8%.

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