Light 401(k) Trading Trend Continues Into 2026

Investors’ 401(k) trading activity remained muted in January following an especially quiet December, Alight Solutions reported in a recent update to its 401(k) Index.

Additionally, investors demonstrated an overwhelming preference for non-U.S. funds, as international equities (45%) and emerging markets (33%) captured the largest share of inflows in the first month of 2026.

January 2026 was the first month of equity inflows since January 2025, suggesting a cautious but meaningful re-engagement by 401(k) plan participants with growth assets. Outflows were primarily from large U.S. equity (59%) and stable value funds (24%).

Daily net transfers averaged 0.011% of 401(k) balances in January, up marginally from 0.007% in December 2025—which marked the lowest level since September 2023. As in December, January saw zero days of above-normal trading activity.

Of 20 trading days last month, 12 favored equities over fixed income. The average asset allocation to equities was 73.5%, up from 73.2% in December. New contributions to equities increased to 73% in January from 70.1% in December.

Other data from Alight showed that in 2025, target-date funds had the largest share of total defined contribution balances (31%) and highest level of contributions (43%) though the end of September 2025. Large-cap equity funds followed, at 29% and 27%, respectively.

Trading Rises, Then Eases, in 2025

In the first half of 2025, trading surged while stocks plummeted. As equities rebounded in the second half of the year, however, trading activity simmered down.

Of the 44 above-normal trading days in 2025, 36 occurred within the first four months of the year. Irom equities to fixed income over the first third of the year. Overall, only 23% of trading days last year favored equity, while 77% favored fixed income.

In 2025, TDFs captured the largest share of total DC balances and the highest level of contributions (49%). Large-cap equity funds followed, at 22% and 23%, respectively.

Bond funds represented nearly half (48%) of all net inflows, while TDFs accounted for almost half of outflows. Still, TDFs remained the largest asset class by percentage of balance, at 30.9%, down 0.2 percentage points from year-end 2024. International funds saw the greatest increase over the year, to 6.9% at year-end 2025 from 6.1% one year earlier.

Alight reported that 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 2 times the average daily net activity of the preceding 12 months.