March was the most active month for retirement plan trading since October 2020, with 0.34% of balances moved, driven largely by investor concerns over the state of the economy, according to Alight’s latest 401(k) Index.
“…when stocks fall, people are quick to sell out of equities and into fixed income.”
Alight’s Rob Austin
Heightened market volatility in Q1 overall fueled a surge in 401(k) trading, signaling an overall shift towards a more reactive retirement portfolio management.
“March’s high trading activity among retirement investors didn’t come as a surprise. We have seen through several market cycles that when stocks fall, people are quick to sell out of equities and into fixed income,” Rob Austin, Head of Thought Leadership at Alight, told 401(k) Specialist. “The sharp sell-off made March’s activity the highest monthly total since October 2020 (roughly 3x an average month).”
Earlier in the quarter, 401(k) investors favored equities, but February’s market downturn triggered a shift toward fixed income, with above-average trading on nearly half of Q1’s trading days. There was above-normal trading activity on 29 of the 60 trading days, Alight’s 401(k) Index Q1 2025 Observations noted. The data shows 0.77% of balances were traded in Q1, the highest level since Q3 2020. 41 of 60 days favored fixed income funds.
“Our historical data shows that participants are often slow to buy back into equities, doing so only after they have rebounded. This combination of selling after prices have fallen and buying after they have increased is usually suboptimal,” Austin added.
March 2025 observations from the Alight Solutions 401(k) Index show that on average, 0.019% of all 401(k) balances were traded daily, and 19 of 21 days favored fixed income funds.
Trading inflows in March mainly went to stable value, bond and money market funds. Outflows were primarily from large U.S. equity funds, target date and small U.S. equity funds. After reflecting market movements and trading activity, average asset allocation in equities decreased from 72.4% in February to 71.5% in March. New contributions to equities decreased from 71.1% in February to 70.1% in March.
Alight’s 401(k) Index tracks the trading activity of over 2 million accounts and provides real-time insights into investor behavior.
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, and a “moderate” relative transfer activity day is when the net daily movement is between 1.5 and two times the average daily net activity of the preceding 12 months.
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
