Tumbling Stocks Prompt 401(k) Investors to Make Trades

While only 0.21% of balances were exchanged in May, it was the highest monthly activity so far this year, according to Alight Solutions.

With large U.S. equities declining by 6.4% in May, 401(k) investors took to making the highest exchanges in their portfolios so far this year, 0.21% of their balances, according to the Alight Solutions 401(k) Index. Additionally, there were three days of above-normal trading activity.

Year-to-date, 401(k) investors have transferred an average of 0.87% of their balances. In May, they favored fixed income over equities, with 17 (77%) of the trading days moving the majority of assets to fixed income and only five days (23%) favoring equities. This continues a trend for 2019; year-to-date, 401(k) investors have moved into fixed income on 87% of the trading days and into equities on only 13% of the days.

Asset classes with the most trading inflows were bond funds (taking in 57% of the inflows, for a total value of $255 million), stable value funds (21%, $94 million) and money market funds (15%, $67 million).

Asset classes with the most trading outflows in May were large U.S. equity funds (63%, $283 million), target-date funds (14%, $65 million) and mid U.S. equity funds (9%, $40 million).

Asset classes with the largest percentage of total balances at the end of May were target-date funds (29%, $57.7 billion), large U.S. equity funds (25%, $50.2 billion) and stable value funds (11%, $21.0 billion).

Asset classes with the most contributions in May were target-date funds (47%, $594 million), large U.S. equity funds (20%, $254 million) and international funds (7%, $90 million).

U.S. bonds were up 1.8% in the month, small U.S. equities were down 7.8%, large U.S. equities gave up 6.5%, and international equities were down 5.4%.