Trading in 401(k) plans was light in 2023, with only 14 above-normal1 days, down significantly from 41 days in 2022. Net trading activity was down as well from 1.27% in 2022 to 0.82% in 2023. Historically, within the Alight Solution 401(k) IndexTM, trading increases as stocks fall. However, with rising markets in 2023, 401(k) investors were content to watch their balances increase and not make large trades.
Bond (48%) and money market (28%) funds saw the most trading inflows while almost two-thirds of trading outflows were from target date funds2 (39%) and company stock (24%).
Most contributions in 2023 went to target date funds2 and large cap U.S. equity funds. Equity gains resulted in investors ending 2023 with 70.5% of their portfolio in equities, compared to 68.2% at the beginning of the year.
Asset classes with most trading inflows in 2023 | Percentage of inflows | Index dollar value ($mil) | |
| 48% | $883 | |
Money market funds | 28% | $504 | |
| Large U.S. equity funds | 16% | $298 |
Asset classes with most trading outflows in 2023 | Percentage of outflows | Index dollar value ($mil) |
Target date funds2 | 39% | $704 |
Company stock | 24% | $429 |
| Stable value | 17% | $316 |
Asset classes with most contributions in 2023 | Percentage of contributions | Index dollar value ($mil) | |
| 49% | $8,272 | |
Large U.S. equity funds | 21% | $3,476 | |
| International funds | 7% | $1,198 |
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Index statistics | 2023 | |
| 0.82% | |
# Fixed days | 155 (62%) | |
| # Equity days | 95 (38%) | |
| # Above normal1 days | 14 |
The following table shows the returns of major market indices for the year ending December 31, 2023:
Returns for common indices | 2023 |
Bloomberg Barclays Capital U.S. Aggregate Bond Index | 5.53% |
S&P 500 Index | 26.29% |
Russell 2000 Index | 16.93% |
MSCI All Country World ex-U.S. Index (net) | 15.62% |
1 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. A “moderate” relative transfer activity day is when the net daily movement is between 1.5 and 2 times the average daily net activity of the preceding 12 months.
2 Target date funds also include the amounts in target risk funds. The amount in the target risk funds is less than 10% of the total.
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