Stock market volatility led to the highest average daily trading in April among 401(k) participants since October 2020, according to Alight.
“Early in the month as stocks fell, investors moved from equities to fixed income,” said a company report May 5 describing its Alight Solutions 401(k) index. “As the market rebounded, they moved back into equities.”
The index covers 401(k) trading activity of more than 2 million people with more than $200 billion in collective assets.
The report said average daily trading April was 0.024% of 401(k) account balances. Seven trading days in April were above normal, bringing the above-normal trading for the year to 36 days.
Twelve of April’s trading days favored fixed income over equities, while nine favored equities, the report said.
The most intense trading day was April 7, which was 9.7 times the average daily trading and the most active since March 12, 2020. April 7 represented the fifth-heaviest trading day since Alight started its index in 1997.
By the end of the month, the average asset allocation to equities was 71.4% vs. 71.5% in March. New contributions to equities decreased to 69.5% in April vs. 70.1% in March.
The largest percentages of trading inflows in April were to stable value (38%), money market funds (25%) and U.S. large-cap equities (17%).
The biggest categories for trading outflows were target-date funds (68%) and bond funds (18%). About 10% of the target-date outflows were from target-risk funds.
However, target-date funds (and target-risk funds) were the biggest source of 401(k) contributions (49%), followed by U.S. large-cap equity funds (22%) and international equity funds (7%).
During April, more money flowed into target-date funds ($597 million) than went out ($323 million) a common monthly occurrence.
