All (Still Very) Quiet on the Participant Trading Front

In the third quarter, participant transfers did something they’ve only done twice in the past 20 years.

That’s right, for only the second time in two decades, participant transfers had not a single day of above-normal trading activity. Indeed, the only other time this happened was the first quarter of 2017.

That’s according to the Alight Solutions 401(k) Index, which has been tracking participant trading and contribution activity since 1997, and which defines a “normal” level of relative transfer activity as being 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. Year-to-date, there have been 29 days of “above normal” trading, according to the index.

Among those transfers 47% ($393 million) went to stable value, while 20% was directed toward mid-cap U.S. equity funds, and another 13% to money market offerings. Once again, target-date funds were a primary source of the transfers, with 37% ($310 million) being drawn from that category, with another 35% ($296 million) coming from company stock and 13% from emerging markets.

With zero days of above-normal activity, the transfers for the quarter, 0.42%, were the lowest since second quarter 2017. The trading that did occur during Q3 favored shifts from equities to fixed income — more than two-thirds (43 out of 63) of trading days in the third quarter, in fact, although overall the quarter was a good one for stocks.

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