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According to the Alight Solutions 401(k) Index™, 2018 was an interesting year for trading activity among 401(k) investors. On the one hand, participants were very active during the year, with 46 days of above-normal1 daily transfer activity--the highest number of above-normal days in the last five years, much higher than the 13 days of above-normal trading in 2017. On the other hand, net trades in 2018 amounted to only 1.42% of total plan balances, making 2018 a record low year for trading activity in the over 20-year history of the Index.
This apparent discrepancy is attributed to the fact that many of the high trading activity days were concentrated around the beginning of the year and toward the end of the year, with the trades moving in opposite directions. Investors started the year in January with a rush to equities. The first seven trading days of the year and 18 of the first 28 trading days were above-normal with nearly universal movement from fixed income investments to equity funds. However, investors reversed this trend in December when Wall Street plummeted. During the seven-day stretch when the Dow dropped by at least 350 points six times, every day was an above-normal day with money flowing from equities to fixed income. In essence, these trades canceled out the actions from the beginning of the year.
Members of the media: please contact MacKenzie Lucas for questions about the Alight Solutions 401(k) Index™.
Learn more about the Alight Solutions 401(k) Index here.