For the second month in a row there was no “above normal” level of participant transfers in August – the first time in more than a year that has been the case.
According to the Alight Solutions 401(k) Index, July and August are the first back-to-back months with no above-normal days since May and June 2017. Participant trading has been quiet of late; May and June 2018 each saw only one day of above-normal trading. Still, July was the first month since June 2017 with zero days of above-normal trading activity in the Alight Solutions 401(k) Index, 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.
Fixed, ‘Up’
What transfers did occur in August favored fixed income generally, and stable value offerings particularly. During the month, 15 out of 23 days favored fixed-income funds, representing 65% of the trades. Trading inflows mainly went to stable value funds (32%), mid U.S. equity funds (20%) and large U.S. equity funds (19%).
Trading outflows during the month came primarily from target-date funds (TDFs) (38%), company stock (32%) and emerging markets funds (13%) – offsetting new contribution flows, which went to:
- 47% – target-date funds ($524 million)
- 20% – large U.S. equity funds ($223 million)
- 8% – international funds ($88 million)
