401(k) investors exhibited see-sawing trading activity in the second quarter of 2023, according to the Alight Solutions 401(k) IndexTM. April and May saw trading activity favoring fixed income, but June saw investors moving money back to equities. This resulted in the lowest net transfer as a percentage of starting balances since Q4 2021. There were just two above-normal1 trading days. Bond funds accounted for the highest level of trading inflows (47%), while outflows favored target date funds2 (28%).
Second quarter observations:
• Net transfers for the quarter were 0.19% of balances.
• 37 out of 62 trading days in the second quarter had net trading dollars moving from equities to fixed income.
Alight Solutions 401(k) Index™ statistics for Q2 2023 and year-to-date: | ||
Index statistics | Q2 2023 | 2023 YTD |
Total transfers as percentage of starting balance | 0.19% | 0.35% |
# Fixed days | 37 (60%) | 78 (63%) |
# Equity days | 25 (40%) | 46 (37%) |
# Above-normal1 days | 2 | 4 |
Asset classes with most trading inflows in Q2 2023 | Percentage of inflows | Index dollar value ($mil) |
Bond funds | 47% | $195 |
Large U.S. equity funds | 23% | $95 |
Money market funds | 21% | $87 |
Asset classes with most trading outflows in Q2 2023 | Percentage of outflows | Index dollar value ($mil) |
Target date funds2 | 28% | $119 |
Stable value funds | 26% | $109 |
Company stock | 22% | $93 |
Returns for common indices | Q2 2023 | 2023 YTD |
Bloomberg Barclays U.S. Aggregate Index | -0.84% | 2.09% |
S&P 500 Index | 8.74% | 16.89% |
Russell 2000 Index | 5.21% | 8.09% |
MSCI All Country World ex-U.S. Index (net) | 2.44% | 9.47% |
[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.
