401(k) Trading in August Reflects 2nd Lowest Month in History

Traders favored equities in the beginning of the month as stocks were gaining, but they preferred fixed-income funds in the month’s second half amid Wall Street sell-offs.



Alight Solutions has published the August update of its 401(k) Index, which notes that trading remained light for investors amid stock-market fluctuations.

The month saw two above-normal trading days, the first since mid-June. The net trades as a percent of balance, at 0.07%, reflect the second-lowest month in the more than 20-year history of the index, Alight’s update says. This is mainly because traders favored equities in the beginning of the month as stocks were gaining, but then favored fixed-income funds as Wall Street had sell-offs in the month’s second half.

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Overall, bond funds topped inflows, at 50%, while the largest share of outflows, at 37%, was from target-date funds.

On average, 0.009% of 401(k) balances were traded daily, compared with an average of 0.008% last month. Investors favored moving assets into equity funds during 13 out of 23 trading days. Trading inflows mainly went to bond, large U.S. equity and international funds, while outflows were primarily from target-date, stable value and mid U.S. equity funds, the update says.

After reflecting market movements and trading activity, average asset allocation in equities decreased from 68.6% in July to 68.3% in August. New contributions to equities remained at 68.5%.

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.

DOL to Host Webinar on Women’s Retirement Security

The webinar will provide steps women can take that will have a positive impact on their financial future.

The Department of Labor’s Employee Benefits Security Administration and Women’s Bureau have partnered with the Women’s Institute for a Secure Retirement to present an upcoming webcast on steps women can take to help improve their retirement security.

According to a DOL press release, the webcast will address challenges many women face in saving for retirement, from the gender pay gap to the caregiving gap. Speakers will focus on the economic trade-offs many women are forced to make during primary working years.

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The webinar aims to help women understand their employer’s retirement plan and the protections that can lead to more informed decisions, the release states.

Retirement industry analyses show that while the negative economic effects of the pandemic are widespread, women are more likely to have been laid off or furloughed during the COVID-19 crisis. Gender-based pay disparities, time out of the workforce and disproportionate caregiving responsibilities for elders and children were already longstanding challenges to women’s retirement preparedness, and the pandemic only worsened these pressures.

Another recent survey found that fewer women than men have achieved their financial goals, again in part because of the pandemic. Results show that 50% of women versus 58% of men are contributing to a 401(k) or individual retirement account; 47% of women are building an emergency fund, compared with 59% of men; and 39% of women are increasing retirement contributions versus 51% of men.

In July, Senator Patty Murray, D-Washington, chair of the Senate Health, Education, Labor and Pensions Committee, and Representative Lauren Underwood, D-Illinois, reintroduced the Women’s Retirement Protection Act of 2021. According to the lawmakers, the legislation aims to address the gender-based retirement savings gap and bolster women’s financial security overall. They said the reintroduction came in light of the COVID-19 pandemic and the related economic crisis that has disproportionately impacted women, particularly women of color.

The “Steps to Improve Women’s Retirement Security Webcast” will be held on September 20 at 2 p.m. Individuals can register here.

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