The Alight Solutions 401(k) Index found that 401k participants who made trades in April generally moved from equity funds into fixed income funds.
“Bond funds, stable value funds, and money market funds accounted for nearly all the net trading inflows for the month,” Alight said.
April had four days of above-normal trading activity—up slightly from March’s value, but lower than the values for January and February, it added.
April observations:
- April saw a continued movement away from equities, with 12 of 21 days favoring fixed income funds
- On average, 0.018 percent of balances were traded daily
Inflows and outflows during the month:
- Trading inflows mainly went to bond, stable value and money market funds
- Outflows were primarily from large U.S. equity, target date, and international funds
April investment portfolios:
- At the end of April, 68.4 percent of balances were invested in equities, the same as March
- 2 percent of new contributions were invested in equities at the end of April, down from 68.7 percent in March
April market observations
“Capital market returns were mostly positive last month, with international equities up over 1.5 percent, and small U.S. equities and large U.S. equities up under 1 percent,” Alight observed. “U.S. bonds fell once again after seeing the slight increase last month.”
Alight defines 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.
