May turned out to be another slow month for trading activity in defined contribution plans, according to the Alight Solutions 401(k) Index – with target-date funds topping the outflows list.
There was only one day of what registers with the index as “above-normal” trading activity for the month, with 28 of those year-to-date, well short of the four registered in April. Alight defines 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. A “high” relative transfer activity day is when the net daily movement exceeds two times the average daily net activity.
Participants who did initiate transfers favored stable value funds (26%, or $77 million), small U.S. equity funds (20%, or $58 million) or bond funds (18%, or $53 million). A third of those flows came from TDFs (35%, or $103 million), with approximately 27% each coming from emerging market funds and company stock.
Not surprisingly, nearly half (46%, or $499 million) of May’s participant contributions were directed to TDFs funds, with 20% deposited into large U.S. equity funds, followed by international funds (8%).
