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Participant Transfers Flock to Fixed

Industry Trends and Research

The markets are off to a strong start, but for the 15th month in a row, participants who transferred balances have made the same move.

More precisely, April marked the 15th month in a row in which participant transfers, on a net basis, favored fixed income funds over equity funds. Indeed, in April, 19 of the 21 trading days went in that direction, according to the Alight Solutions 401(k) Index™. 

Not that there was a lot of trading; on average, 0.014% of 401(k) balances were traded daily. Moreover, there were just two “above normal” volume trading days in April, compared with 11 year-to-date. (An “above normal” 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.)

Trading inflows mainly went to bond (63%, $227 million), international (11%, $39 million) and target-date funds (10%, $38 million), and mainly came from:

  • large U.S. equity funds (47%; $170 million);
  • company stock (35%; $127 million), and 
  • small U.S. equity funds (13%; $46 million).

The top recipient of new contribution flows continued to be target-date funds (29%), with $61,325,000 deposited, followed by the nearly $55 million contributed to large U.S. equity funds (26%). Stable value funds received 10% of the month’s contribution deposits, some $21,136,000.