401(k) fixed-income activity perks amid COVID-19

Participants in 401(k) plans showed increased trading activity in late February as fear of the spread of COVID-19 virus drove equity markets sharply lower. Data collected by Alight Solutions tracks trading activity of nearly $200 billion in 401(k) assets show investors are moving assets into fixed-income strategies.

Trading activity typically makes up a very small piece of total assets, however the average activity as percentage of beginning assets was 0.02% over the first 35 days of 2020 and spiked as high as 0.27% on Feb. 28. The Alight Solutions 401(k) index, which measures daily trading activity as a multiple of daily transfer activity over the past 12 months, rose to 15.8 times on Feb. 28, from an average 1.15 times from Jan. 2 to Feb. 20. From Feb. 20 through Feb. 28 equity markets, as measured by the MSCI ACWI IMI index, fell 11.14% as bond yields fell markedly.

Trading activity represents transfers in to and out of self-directed brokerage windows, but not activity within self-directed brokerage accounts.