The stock market has been on a tear of late – 29 record closes for the S&P 500 through July 31, and five of those in July alone. So, how have 401(k) participants responded?
Well, according to the Alight Solutions (previously Aon Hewitt) 401(k) Index, July turned out to be the lightest trading month for defined contribution plan investors in over five years. In fact, just 0.11% of balances were traded in the month — the lowest level since April 2012, and the second lowest month since 1997 when the Index was started.
That, of course, was even more tepid than June, which until now had been the lightest trading month this year for defined contribution plan investors, with just 0.013% of balances traded each day, and no days of above normal transfer volumes. 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. July actually had one day of above-normal trading levels (there have only been three year-to-date).
Money Movement(s)
The money that did move primarily came from:
- Company stock (52% of the total) - $111 million
- Stable value (11%) - $25 million
- Small U.S. equity funds (11%) - $24 million
And those moneys went to:
- International funds ($99 million, 46%)
- Emerging markets ($33 million, 15%)
- Target-date funds ($32 million, 15%)
New Contributions
Contributions continued to favor:
- Target-date funds - $430 million
- Large U.S. equity funds - $191 million
- International funds - $78 million
The Alight Solutions 401(k) Index tracks the 401(k) trading activities of nearly 1.3 million participants representing nearly $160 billion in collective assets.
