October Saw Moderate Uptick in DC Plan Investor Trading

Following light trading the previous month, October saw a moderate increase in trading among DC plan investors, according to the Alight Solutions 401(k) Index.

“Trading activity remained light in October, following the trend we have seen throughout 2017. In general, 401(k) investors seem content with their portfolios as markets increase,” says Rob Austin, director of research at Alight Solutions.

The findings show that there were three days of above-normal trading activity in October, compared to only one such day in September and 10 for the entire year.

On average, 0.014% of balances traded each day in October, and there was a 50/50 split between trading days favoring equities and fixed income. The year-to-date data favors fixed-income days over equity days, with the split of 113 (54%) to 97 (46%).

The report explains that 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 index equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.

Trading inflows for October went primarily to international funds (46%) at $174 million, followed by bond funds (22%) and large U.S. equity funds (14%). Outflows, meanwhile, were primarily from company stock (40%), target date funds (34%) and stable value funds (20%).

Investment portfolios show that at the end of October, nearly 68% of balances were invested in equities, up from 67.6% at the end of September. In addition, 67.2% of new contributions were invested in equities, up slightly from 67% in September.

Target date funds continued to lead in new contributions, registering 46% of contributions with an index value of $416 million, followed by large U.S. equity funds at 19% and international funds at 8%. While the dollar amounts are slightly different, the overall percentages are identical to the September data.

In October, capital markets realized positive gains for large U.S. equity funds (represented by the S&P 500 Index), international equities (MSCI All Country World ex-U.S. Index), small U.S. equity funds (Russell 2000 Index), and U.S. bonds (Bloomberg Barclays U.S. Aggregate Index).

The October returns for the indices show:

  • Bloomberg Barclays U.S. Aggregate Index: 0.1% (3.2% YTD)
  • S&P 500 Index: 2.3% (16.9% YTD)
  • Russell 2000 Index: 0.9% (11.9% YTD)
  • MSCI All Country World ex-U.S. Index (net): 1.9% (23.4% YTD)

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