The markets were volatile in October, producing the busiest participant trading activity since February.
According to the Alight Solutions 401(k) Index, there were five days of above-normal trading activity during the month, whereas year-to-date there have been 34. 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 in the index, which tracks the 401(k) trading activities of nearly 2 million participants representing more than $200 billion in collective assets.
That stood in sharp contrast with the third quarter, when participant transfers did something they’ve only done twice in the past 20 years – or more precisely didn’t do something, with not a single day of above-normal trading activity. Indeed, the only other time this happened was the first quarter of 2017.
But as for October – and perhaps not surprisingly in that environment, net trading activity overwhelmingly went from equities to fixed income funds (15 of the 23 trading days). On average, just 0.019% of 401(k) balances were traded daily, however. With regard to specific asset classes, the following drew the most inflows:
60% - stable value funds ($224 million)
17% - money market funds ($63 million)
16% - company stock ($60 million)
As for where that money came from:
51% - target date funds ($191 million)
19% - small U.S. equity funds ($70 million)
14% - mid U.S. equity funds ($52 million)
On the other hand, new contribution dollars went to:
47% - target date funds ($459 million)
20% - large U.S. equity fund ($197 million)
7% - international funds ($72 million)