Russia’s invasion of Ukraine and skyrocketing oil prices weighed heavily on 401k participants, making February a busy trading month that continued into early March.
“High activity continued into March with about two times above-normal trading on Monday alone.”
“As international political events drove Wall Street lower, 401k investors reacted with above-normal trading activity,” Alight Solutions said Tuesday. “Net trading saw investors moving assets into fixed income over equity.”
There were six above-normal trading days in February, and high activity continued into March with about two times above-normal trading on Monday alone.
February saw 14 of 19 days that favored fixed-income funds.
Trading inflows mainly went to stable value, money market, and bond funds. Outflows were primarily from target date, large U.S. equity, and small U.S. equity funds.
After reflecting on market movements and trading activity, average asset allocation in equities decreased from 70% in January to 69.5% in February. New contributions to equities decreased from 70.1% in January to 69.5% in February.
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 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.
Oil announcement
Also Tuesday, Reuters reported that the Biden Administration announced a ban on Russian oil imports. Britain said it will phase them out by year-end, decisions expected to disrupt the global energy market further as Russia is the second-largest crude exporter.
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.
