Large losses on Wall Street caused a brief burst of trading activity in August, according to the Aon Hewitt 401(k) Index.
In August, an average of 0.026% of total balances transferred, slightly higher than the averages for July (0.021%) and June (0.024%) — but still less than May’s average of 0.031%.
That said, the two August days of above-normal trading activity in the index of some 1.3 million participants occurred on days with some of the biggest stock retreats in recent memory. On Friday, August 21 while equities were off by about 3%, trading activity was approximately twice the normal level, and the following Monday, the 401(k) Index had the highest trading day since 2011 — approximately seven times normal trading levels.
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 Aon Hewitt 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 the index has seen 28 above-normal trading days.
Not surprising, considering concerns about stock prices, GIC/stable value (58%, or $222 million), money market (27%, or $104 million) and bond funds (11%, or $43 million) saw the most inflows over the month. Target-date funds suffered the biggest outflows — 59%, or $227 million — distantly followed by small U.S. equity (11%), and international funds (8%).
However, target-date funds continued to receive the plurality of new contributions into individuals’ accounts, 40% of August’s total, while large US equity funds drew 19%. Target-date funds now comprise nearly a quarter (23%) of the $160 billion tracked by the Aon Hewitt 401(k) Index.
