401(k) Trading Sees Another Light Month in October

Alight Solutions has published the October update of its 401(k) Index, which notes that trading remained light for investors.

The month saw two above-normal trading days, Alight’s update says. Stable value funds accounted for over 80% of net inflows, while outflows were primarily from target-date funds (37%), company stock (35%) and large U.S. equity funds (12%).

On average, 0.012% of 401(k) balances were traded daily, the same as last month. Investors favored moving assets into fixed income funds during 18 out of 21 trading days. Trading inflows mainly went to stable value, money market and bond funds, while outflows were primarily from target-date, company stock and large U.S. equity funds, the update says.

After reflecting market movements and trading activity, average asset allocation in equities increased from 67.2% in September to 68.1% in October. New contributions to equities were nearly the same, going from to 68% in September to 68.1% in October.

According to the index, 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. A “high” relative transfer activity day is when the net daily movement exceeds two times the average daily net activity. A “moderate” relative transfer activity day is when the net daily movement is between 1.5 and two times the average daily net activity of the preceding 12 months.