Fixed income was heavily favored in October, and for the first time in its more than 20-year history, the Alight Solutions 401(k) Index saw net trading flows move in that direction for an entire month.
There were also seven days of above-normal trading activity—the most since March, according to Lincolnshire, Illinois-based Alight.
The firm found that, on average, 0.028% of 401k balances were traded daily with trading inflows mainly to stable value, bond, and money market funds. Outflows were primarily from large U.S. equity, target date, and mid-U.S. equity funds.
“After reflecting market movements and trading activity, average asset allocation in equities decreased from 66.1% in September to 65.4% in October,” Alight said. “New contributions to equities remained at 67.2% from September through October.”
Indices
Indices were mixed through October with small U.S. equities (represented by the Russell 2000 Index) up 2.1%.
The remaining indices fell with large U.S. equities (represented by the S&P 500 Index) dropping -2.7%, international equities (represented by the MSCI All Country World ex-U.S. Index) falling -2.2%, and U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) down -0.5%.
A “normal” level of relative transfer activity is when the net daily movement of participants’ balances as a percent of total 401k balances within the Alight Solutions 401(k) 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.
Target date funds also include the amounts in target risk funds, according to Alight. The amount in the target risk funds is less than 10% of the total.