Inflation fears, high gas prices, and the volatility they bring saw flights to (perceived) safety in June, continuing a trend in 401k trading in recent months, one that shows little sign of slowing.
Alight’s 401(k) Index had an exceptionally high day on Monday, June 13, with 2.39 times average activity.
The Alight 401(k) Index found that there were five above-normal trading days, and all but three days in the month of June had net trading flows going from equities to fixed income.
On average, 0.015% of 401k balances were traded daily, with 18 of 21 days favored fixed income funds. Net trading inflows exclusively went to fixed income funds with stable value leading the way, while outflows were primarily from target date, large U.S. equity, and international equity funds.
After reflecting on market movements and trading activity, average asset allocation in equities decreased from 68.8% in May to 67.7% in June, and new contributions to equities decreased from 69.0% in May to 68.7% in June.
Alight’s 401(k) Index, which tracks the 401k-trading activity of over 2 million people with more than $200 billion in collective assets, had an exceptionally high day on Monday, June 13, with 2.39 times average activity.
A “normal” level of relative transfer activity is when the net daily movement of participants’ balances, as a percent of total 401(k) 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.
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.
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