Large losses on Wall Street caused a brief burst of trading activity in August, according to the Aon Hewitt 401(k) Index. Although August experienced only two days of above-normal trading activity, they occurred on days with some of the biggest stock retreats in recent memory.
On Friday, August 21st while equities were off by about 3%, trading activity was approximately twice the normal level. On Monday, August 24th, as stocks plunged further, the 401(k) Index had the highest trading day since 2011—approximately seven times normal trading levels.
In August, an average of 0.026% of total balances transferred. This was slightly higher than the averages for July (0.021%) and June (0.024%) but less than May’s average of 0.031%.
- GIC/stable value, money market, and bond funds saw the most inflows over the month.
- The most common classes for outflows were target-date funds, small U.S. equity, and international funds.
- Target-date funds continued to receive the majority of new contributions into individuals’ accounts.
- When combining contributions, trades, and market activity, participants’ overall allocation to equities declined in August to 65.4%, from 66.4% in July. Future contributions to equities remained at 66.8%.
Among growing concerns over the Chinese economy, capital market performance struggled in August.
- U.S. Fixed Income (represented by the Barclays Aggregate Index), U.S. Small-Cap equities (represented by the Russell 2000 Index, U.S. Large-Cap equities (represented by the S&P 500 Index), and International equities (represented by the MSCI ACWI ex-US Index) all experienced negative returns.
SEE ALSO:
State Farm Hit with Target Date ‘Excessive Fee’ Lawsuit
Why the Time is Right for Rollovers
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of 401(k) Specialist and 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. Experienced financial services content executive specializing in creative new media delivery. He joined the American Retirement Association in 2023 as Chief Content Officer, overseeing communications for the organization, as well as its sister organizations.