Are they frozen in fear by skyrocketing markets or sitting on a beach sipping smoothies? Maybe they’re just more aware.
June was the lightest trading month this year for defined contribution plan investors, according to the Alight Solutions 401k Index (formerly Aon Index).
On average, 0.013 percent of balances traded each day during the month and there were no days of above normal trading.
Fully 39 percent of inflows went to international funds and 23 percent went to target date funds. Outflows were primarily company stock, stable value, and small U.S. equity funds.
“It’s not uncommon to see lighter than normal trading activity when the market is increasing,” Rob Austin, director of research with Alight Solutions, said about the results. “With major stock indices reaching record highs in June, it comes as no surprise that few participants made trades.”
At the end of June, 67 percent of balances in 401k investment portfolio were invested in equities, up marginally from 66.9 percent at the end of May, and 67.1 percent of new contributions were invested in equities, down slightly from 67.2 percent in May.
“In June, capital markets saw primarily positive results, with sluggish fixed income returns and strong U.S. small cap equity returns,” according to the company.
It added that 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 two times the average daily net activity of the preceding 12 months.
It notes target date funds also include the amounts in target risk funds for companies who do not have target date funds. The amount in the target risk funds is less than 10 percent 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.
