401k investors were busy traders in January, driven by volatile markets at the beginning of the year, according to the Alight Solutions 401(k) Index.
On average, 0.017% of 401k balances were traded daily and 13 of 20 days favored fixed income funds.
Alight said “An average of 0.017% of balances were traded daily, the highest level since January 2021. January 2022 had 5 above-normal trading days—a stark increase from the three days seen in all of 2021. Two-thirds of days saw investors favoring moving assets into fixed income over equity.”
On average, 0.017% of 401k balances were traded daily and 13 of 20 days favored fixed-income funds.
Trading inflows mainly went to stable value, bond, and money market funds, the Illinois-based Alight reported. Outflows were primarily from target date, large U.S. equity, and mid-U.S. equity funds.
After reflecting on market movements and trading activity, average asset allocation in equities decreased from 70.7% in December to 70.0% in January. New contributions to equities increased from 68.3% in December to 70.1% in January.
The news comes after net trading activity for 2021 was 0.53% of balances, the lowest on record for the 401k Index, which started in 1997 and well below 2020’s value of 3.51%.
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 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 2 times the average daily net activity of the preceding 12 months.
Target date funds also include the amounts in target risk funds. The amount in the target risk funds is less than 10% of the total.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.