With the markets plummeting at the end of February over fears of the repercussions of a worldwide coronavirus outbreak, 401(k) investors’ trades spiked in the final week of the month—marking it as one of the busiest five-day stretches in the 20 year-plus history of the Alight Solutions 401(k) Index.
During the month, 0.046% of 401(k) balances were traded daily, the highest level since August 2011. In particular, the net trading activity on February 28 was 15.8 times the average daily level, which surpassed the previous high of 11.8 times the average, set in February 2018.
The last week of February had more net trading activity than all of the activity in the fourth quarter of 2019. Sixteen of the 19 trading days in the month favored fixed income funds. Asset classes with the most trading inflows in February were bond funds, taking in 47% of the flows, valued at $687 million, followed by stable value funds (41% and $597 million) and money market funds (11% and $160 million).
Asset classes with the most trading outflows in February were large U.S. equity funds (43% and $634 million), target-date funds (TDFs) (27% and $397 million) and mid U.S. equity funds (10% and $144 million). Asset classes with the largest percentage of the total balances at the end of February were TDFs (30% and $62.1 billion), large U.S. equity funds (25% and $52.5 billion) and stable value funds (10% and $21.4 billion).
Asset classes with the most contributions in February were TDFs (45% and $801 million), large U.S. equity funds (20% and $354 million) and company stock funds (7% and $117 million).
During the month, international equities dropped 7.9%, large U.S. equities were down 8.2% and small U.S. equities lost 8.4% of their value. U.S. bonds rose by 1.8%.