401(k) Trading Remains Light Through February, Early March

Retirement investors’ trading activity in their 401(k) accounts remained light in February, making few changes to their long-term allocations, Alight Solutions reported in a recent update to its 401(k) Index.

As in January, there were no above-normal trading days last month. Investors who did trade made relatively modest moves, trading an average of 0.013% of balances daily and favoring fixed income on 13 out of 19 trading days, the index showed. Investors continued to diversify, directing inflows to international equity (36% of inflows) and emerging market funds (24%), while scaling back exposure to large U.S. equity funds (62% of outflows) and company stock (34%).

Thinking past February, Rob Austin, Alight’s head of thought leadership, told PLANSPONSOR that the global conflict in Iran has not increased 401(k) trading much so far in March.

“Over the past week, we’ve seen only a small uptick in trading activity, and nothing that looks like panic,” Austin wrote in a response to emailed questions. “The overall tone feels cautious and watchful, not reactive.”

After market movements and trading activity, average asset allocation in equities was 73.5% in February, unchanged from January. New contributions to equities decreased to 72% from 73% in January.

Other data from Alight showed that target-date funds had the largest share of total defined contribution balances (31%) and the highest level of contributions (45%) through the end of February. Stand-alone large-cap equity funds followed, at 29% and 26%, respectively.