The turkey and stuffing were heavy but the 401k trading light for the month of November, according to the Alight Solutions 401(k) Index.
The Illinois-based record keeper found there were no days of above-normal activity, and two-thirds of days saw net trading activity favor equity funds over fixed income.
“New contributions to equities increased from 69.2% in October to 69.7%.”
On average, net daily trading activity was 0.009% of 401k balances and 14 of 21 days favored equity funds.
401k trading inflows mainly went to large U.S. equity, bond, and international equity funds, while outflows were primarily from stable value, target date, and money market funds.
After reflecting market movements and trading activity, average asset allocation in equities decreased from 70.5% in October to 70.1% in November while new contributions to equities increased from 69.2% in October to 69.7% in November.
This follows similar activity in October, in which a skyrocketing market didn’t sway participants, and most stayed put with the allocations chosen. When trades were made, fixed income fared best. October saw the best monthly S&P 500 performance since last November, yet 401k investors nonetheless still traded lightly.
Alight defines a “normal” level of relative 40qk transfer activity as 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.
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.
