Trump and tax bills apparently had little impact on trading among 401k and defined contribution plan investors, as activity was light in November, according to the Alight Solutions 401(k) Index.
In an indication that 401k participant behavior continues to improve, the organization reports only one day of above normal trading activity.
For the month, Alight observed that, on average, a minuscule 0.014 percent of balances were traded each day, and that 12 out of 21 days favored fixed income funds.
In terms of inflows and outflows during the month, trading inflows went to international, bond, and mid-U.S. equity funds, while outflows were primarily from company stock, stable value, and small U.S. equity funds.
As for investment portfolios in November, 68.3 percent of balances were invested in equities at the end of the month, up from 67.9 percent at the end of October.
Of the new contributions, 67.2 percent of were invested in equities, unchanged from a month earlier.
Overall, Alight said strong positive gains were seen for large and small U.S. equity funds (represented by the S&P 500 Index and Russell 2000 Index, respectively).
International equities (represented by the MSCI All Country World ex-U.S. Index) experienced lesser gains. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) experienced a slight loss in November.
The company counts a “normal” level of relative transfer activity as 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.
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.
