Spooked by the fear and uncertainty caused by the coronavirus outbreak in the U.S. and abroad, 401(k) participants flooded record keepers with calls and website visits as well as, in some cases, near record trading as February drew to a close.
Stock-trading during the last week in February was rivaled only by a few weeks in 2008 during the economic crisis and the week after the market's reopening in 2001 following the Sept. 11 terrorist attacks, according to the latest research by Alight Solutions LLC that reviewed trading data through Feb. 28.
The record keeper's 401(k) index has been tracking the behavior of clients' participants since 1997.
Robert Austin, Alight's Charlotte, N.C.-based director of research, said the intensity of transaction activity would have been more dramatic if not for plans' extensive offering — and participants' extensive use — of target-date funds and auto features.
Still, the net trading activity on Feb. 28 was 15.8 times the average daily trading, which exceeded the previous daily trade record of 11.8 times the average daily trade recorded on Feb. 5, 2018.
On average, 0.046% of 401(k) balances were traded daily in February — the highest rate since August 2011.
Asset classes with the highest outflows during all of February were large-cap domestic equity (43%), target-date funds (27%) and midcap domestic equity (10%). Most inflows went to bond funds (47%), stable value funds (41%) and money market funds (11%).
However, the firm also noted that asset classes with the most contributions in February were target-date funds (45%), large-cap domestic equity funds (20%) and company stock (7%).
"People are still bullish," said Mr. Austin, adding that the average equity asset allocation among participants tracked by the Alight Solutions 401(k) Index was 66% in February vs. 67.7% in January.
The index covers more than 2 million participants with more than $200 billion in Alight record-kept accounts.
Several other DC industry members reported significant spikes in call-center volumes and website engagements, but they said they believed most of the action focused on seeking reassurance and checking allocations rather than making trades.
Eye-popping market gyrations of recent weeks fueled most of their concerns, record keepers, advisers and consultants said.
The S&P 500 index fell 10.95% for the two-week period ended March 6. The Bloomberg Barclays U.S. Aggregate Bond index was up 3.16% over the same period.