401(k) Participant Transfers Increase in May

Falling equity returns accelerated the trend this year of participants moving into fixed income investments, according to Alight Solutions.

With large U.S. equities declining by 6.4% in May, 401(k) investors took to making the highest exchanges in their portfolios so far this year, 0.21% of their balances, according to the Alight Solutions 401(k) Index. Additionally, there were three days of above-normal trading activity.

Year-to-date, 401(k) investors have transferred an average of 0.87% of their balances. In May, they favored fixed income over equities, with 17 (77%) of the trading days moving the majority of assets to fixed income and only five days (23%) favoring equities. This continues a trend for 2019; year-to-date, 401(k) investors have moved into fixed income on 87% of the trading days and into equities on only 13% of the days.

Asset classes with the most trading inflows were bond funds (taking in 57% of the inflows, for a total value of $255 million), stable value funds (21%, $94 million) and money market funds (15%, $67 million).

Asset classes with the most trading outflows in May were large U.S. equity funds (63%, $283 million), target-date funds (14%, $65 million) and mid U.S. equity funds (9%, $40 million).

Asset classes with the largest percentage of total balances at the end of May were target-date funds (29%, $57.7 billion), large U.S. equity funds (25%, $50.2 billion) and stable value funds (11%, $21.0 billion).

Asset classes with the most contributions in May were target-date funds (47%, $594 million), large U.S. equity funds (20%, $254 million) and international funds (7%, $90 million).

U.S. bonds were up 1.8% in the month, small U.S. equities were down 7.8%, large U.S. equities gave up 6.5%, and international equities were down 5.4%.