Since 1997, trading for defined contribution (DC) plan investors was fairly leveled or heightened, but was at its lowest in April 2012. In July, just 0.11% of balances were traded throughout the month—the lowest level in since then and the second lowest since the Alight Solutions (formerly Aon Hewitt) 401(k) Index began.
According to Alight Solutions, only 0.012% of balances were traded each day in July, with only one day of above normal trading. There were only three days of above normal trading in 2017 year-to-date (YTD). Most inflows went to non-U.S. funds, including 46% to international funds, with an index dollar value of $99 million, and 15% went to emerging market funds, amounting to $33 million in index dollar value.
The majority of trading outflows were primarily concentrated on company stock, with 52% of outflows and $111 million in index dollar value; stable value funds (11% outflow and $25 million); and small U.S. equity funds (11% and $24 million).
Investment portfolios were rather balanced, with 67.4% invested in equities, a jump from the 67.0% at the end of June, while 67.3% of new contributions were invested in equities.
Target-date funds (TDFs), large U.S. equity funds, and stable value funds earned spots as the asset classes with the largest percentages of total balances, at 25% for TDFs, 24% for equity funds and 11% for stable value funds. The asset classes with the most contributions in July included TDFs (44%), large U.S. equity funds (20%) and international funds (8%).
While trading activity among DC plan participants took a plunge, Alight says capital markets gathered positive results, especially with strong returns in large U.S. equity funds and international funds.