Alight Solutions has published January updates from its 401(k) Index, showing that, with the backdrop of a volatile stock market, 401(k) investors traded an average of 0.017% of balances daily—the highest levels in a year.
The month saw five above-normal trading days, which Alight says is a stark increase from the three days seen in all of 2021. Investors favored moving assets into fixed income over equity 13 out of 20 days, and total transfers as a percentage of starting balance stood at 0.15%.
According to the index, a “normal” level of relative transfer activity is when the net daily movement of participants’ balances, as a percent of total 401(k) balances within the index, equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months. A “high” relative transfer activity day is when the net daily movement exceeds two times the average daily net activity. A “moderate” relative transfer activity day is when the net daily movement is between 1.5 and two times the average daily net activity of the preceding 12 months.
The index shows trading inflows mainly went to stable value, bond and money market funds. Outflows were primarily from target-date funds, large U.S. equity funds and mid-cap U.S. equity funds.
Alight also found that, after reflecting market movements and trading activity, the average asset allocation in equities decreased from 70.7% in December to 70.0% in January. On the other hand, new contributions to equities increased from 68.3% in December to 70.1% in January.