Assets in 401(k) plans tracked by Alight Solutions have dropped by about 20% since Feb. 24, a result primarily of stock-market declines rather than participants' bailing out of their accounts.
"We have seen the overall allocation to equities drop from 66% at the end of February to about 62% now," Robert Austin, the company's Charlotte, N.C.-based director of research wrote in an email.
"Much of this has to do with the market performance of stocks," he added. "The overall allocation hasn't really changed too much because while some people are trading out of funds like target-date funds, many people are contributing to them."
At year-end 2019, the overall equity allocation was 68.1% vs. 66.6% at year-end 2018.
Alight Solutions recently noted that the use of qualified default investment alternatives — dominated by target-date funds — and auto-enrollment have meant that participants' assets are being replenished even amid stock market turmoil.
"While many investors have transferred money out of the accounts, people continue to make their contributions to target date funds — and equities in general — thereby reducing the impact of the trades and market activity," Mr. Austin wrote.
For example, from Feb. 28 to March 18, the aggregate asset allocation to target date funds slipped to 29% from 30%, according to Alight's 401(k) index, which has been following investing behavior of clients' participants since 1997. The index covers more than 2 million participants with more than $200 billion in Alight record-kept accounts.
The asset allocation to large cap domestic equity — the second biggest category in the Alight 401(k) index — dropped to 24% from 25% during this period.
The biggest change came from stable value, where asset allocation rose to 13% from 10%. Bond allocations rose to 10% from 9% and money market allocations rose to 2% from 1%.
The latest allocation figures aren't that much different from those of recent years. For example, the target-date fund allocation was 29.3% last year and 28% in 2018. Large cap U.S. domestic equity's allocation was 26% last year and 24.1% in 2018.
Stable value's allocation was 9.5% in 2019 vs. 11.2% in 2018. The bond allocation was 7.9% last year vs. 8% in 2018.
