401k participants favored safe money (relatively) in June, and with all that’s happened recently, who can blame them?
While it was a slow month overall for trading in defined contribution plans, when 401k investors made trades, they tended to favor fixed income funds over equities, according to the Alight Solutions 401(k) Index.
Alight notes that there was only one day of above-normal trading activity in June, and there was continued movement away from equities, with 13 of 21 days favoring fixed income funds.
On average, 0.013 percent of balances were traded daily
Inflows and outflows during the month:
- Trading inflows mainly went to small U.S. equity, mid-U.S. equity, and stable value funds
- Outflows were primarily from target date, emerging markets, and international funds
June investment portfolios:
- At the end of June, asset allocation in equities were in line with May, with 68.5 percent of assets in equities
- 1 percent of new contributions were invested in equities at the end of June, up slightly from 68 percent in May
June market observations
- Domestic equities experienced slightly positive market returns for the month, with both large U.S. equities and small U.S. equities up over 1 percent.
- S. bonds fell -0.1 percent, while the International equities fell close to -2 percent.
According to Alight, 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.
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.
