Light 401(k) Trades in July Even as Wall Street Posts Strong Month

Alight Solutions has published the July update of its 401(k) Index, which notes that it was a light trading month for investors.

There were no above-normal trading days this month, even as Wall Street posted its best month since November 2020, Alight’s update says. Stable value funds topped inflows at 59%, while 54% of outflows were from target-date funds.

On average, 0.008% of 401(k) balances were traded daily, compared to an average of 0.015% last month. Investors favored moving assets into fixed-income funds during 13 out of 20 trading days. Trading inflows mainly went to stable value, money market and large U.S. equity funds, while outflows were primarily from target-date, bond and company stock funds, the update says.

After reflecting market movements and trading activity, average asset allocation in equities increased from 67.7% in June to 68.6% in July. New contributions to equities decreased from 68.7% in June to 68.5% in July.

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.