November was a time to give thanks for positive participant behavior.
The month saw the lightest amount of trading among 401k investors for the year, according to the Alight Solutions 401(k) Index. Average net daily trading activity was 0.013% of balances and there were zero days of above-normal activity.
Nineteen of 20 days favored fixed-income funds. Trading inflows mainly went to bond, stable value and target-date funds, while outflows were primarily from company stock, large U.S. equity and small U.S. equity funds.
November investment portfolios
After reflecting market movements and trading activity, average asset allocation in equities increased from 67.3% in October to 67.7% in November
New contributions to equities increased from 67.4% in October to 67.5% in November.
November market observations
U.S. equity returns were strong in November with small U.S. equities (represented by the Russell 2000 Index) rising 4.1% and large U.S. equities (represented by the S&P 500 Index) gaining 3.6%. International equities (represented by the MSCI All Country World ex-U.S. Index) increased close to 1%. U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) fell slightly by 0.1%.
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 401k Inde equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.
A “high” relative transfer activity is when the net daily movement exceeds two times the average daily net activity.
A “moderate” relative transfer activity 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. 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.
