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Participant Transfers Trended Back to ‘Normal’ in November

Amid volatile markets, participant trading picked up in November.

In what was described as a “more typical” month, there were three days (out of 21) of “above normal” trading during November, according to the Alight Solutions 401(k) Index. That was down from the five the previous month, but well ahead of the period July through September, when there were no above-normal trading days.

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.

Fixed, ‘Up’

During November, most of those transfers were toward fixed income options, and more than half (59%) of the dollars involved went to stable value funds, with another 18% going to the relative safety of money market funds.

Those monies were primarily pulled from target-date funds (62%, or $159 million) and company stock funds (25%, or $65 million).

Target-date funds continued to draw most of the incoming contributions (48%), some $528 million, doubtless aided by their role as a common default investment vehicle.

According to estimates from the nonpartisan Employee Benefit Research Institute (EBRI), the average 401(k) account balance for younger (25-34), less tenured (1-4 years) workers jumped 3.2% in November, reversing October’s 3.7% tumble – and leaving it up 24.9% year-to-date. Among older (age 55-64) workers with more than 20 years of tenure, whose average balance is generally more influenced by market moves than contributions, the average 401(k) balance was 1.5% higher, rebounding from the previous month’s 4.2% decline. Year-to-date, that average balance is 4.7% higher.