Alight: August 401(k) Trading Light, ‘Quiet’

Trading in 401(k) accounts remained low in August, marking a “quiet” month for investors, according to Alight Solutions’ August update to its 401(k) index.

While Wall Street had its worst day since May on August 1—after the government reported a sharp slowdown in hiring and President Donald Trump imposed tariffs on imports from several U.S. trading partners—investors had zero above-normal trading days in August. There have been 43 above-normal dates so far in 2025, only one of which has taken place since the end of the second quarter.

“August’s more measured trading activity shows that people were content to watch their retirement accounts grow,” said Rob Austin, Alight’s head of thought leadership, in an email to PLANSPONSOR. “The direction of the trading—from equities to fixed income—hints that people were rebalancing.”

On average, 0.009% of 401(k) balances were traded daily, according to the index; 18 out of 21 days in August favored fixed-income funds.

The asset classes with the most trading inflows consisted primarily of bond funds (68%), money market funds (13%) and emerging market funds (9%). Outflows came mainly from large-cap U.S. equity funds (44%), small-cap U.S. equity funds (20%) and company stock (16%).

The average asset allocation to equities increased to 72.9% in August from 72.7% in July, Alight’s update showed. New contributions to equities decreased slightly, to 70.3% in August from 70.4% in July.

At month-end, the investments with the largest share of total balances included target-date funds (31%), large-cap U.S. equity funds (30%) and international equity funds (7%), the exact same breakdown as in July. The asset classes with the most contributions were the same as those with the largest share of total balances. Contributions to TDFs increased slightly, to 51% from 49% in July while those to large-cap funds decreased by one percentage point, to 22% from 23%.

Alight reported that a “normal” level of relative transfer activity is when the net daily movement of participants’ balances, as a percent of total 401(k) balances within the index, equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months. A “high” relative transfer activity day is when the net daily movement exceeds two times the average daily net activity. A “moderate” relative transfer activity day is when the net daily movement is between 1.5 and 2 times the average daily net activity of the preceding 12 months.