Alight: 401(k) participants lean on conservative investments in June

Participants in 401(k) plans favored conservative investments in their June trading, according to the latest Alight Solutions 401(k) index issued Wednesday.

The leading asset allocation categories for trading inflows were bond funds (62%), stable value funds (26%) and money market funds (10%). The biggest trading outflow categories were large-cap domestic equity funds (45%), target-date funds (24%) and company stock (13%).

However, target-date funds grabbed the biggest piece of contributions (46% of allocations). Large-cap domestic equity (21%) and developed international equity (7%) were the next largest source of contributions.

Despite participants' conservative trading preferences, Alight reported that the average asset allocation to equities rose to 65.6% in June from 65.4% in May. New contributions to equities increased to 67.5% in June vs. 65.4% in May.

Alight reported three above-normal trading days in June vs. none in May and three in April. There were 18 above-normal trading days in March during the height of the coronavirus-induced market turmoil.

"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 0.3 times to 1.5 times the average daily net activity of the preceding 12 months," the Alight report said.

The Alight index covers more than 2 million participants with more than $200 billion in Alight record-kept accounts.