Since 1997, trading for defined contribution (DC) plan investors was fairly leveled or heightened, but was at its lowest in April 2012. In July, just 0.11% of balances were traded throughout the month—the lowest level since then and the second lowest since the Alight Solutions (formerly Aon Hewitt) 401(k) Index began.
According to Alight Solutions, only 0.012% of balances were traded each day in July, with only one day of above normal trading. There were only three days of above normal trading in 2017 year-to-date (YTD). Most inflows went to non-U.S. funds, including 46% to international funds, with an index dollar value of $99 million, and 15% went to emerging market funds, amounting to $33 million in index dollar value.
The majority of trading outflows were primarily concentrated in company stock, with 52% of outflows and $111 million in index dollar value; stable value funds (11% outflow and $25 million); and small U.S. equity funds (11% and $24 million).
Investment portfolios were rather balanced, with 67.4% invested in equities, a jump from the 67.0% at the end of June, while 67.3% of new contributions were invested in equities.
Target-date funds (TDFs), large U.S. equity funds, and stable value funds earned spots as the asset classes with the largest percentages of total balances, at 25% for TDFs, 24% for equity funds and 11% for stable value funds. The asset classes with the most contributions in July included TDFs (44%), large U.S. equity funds (20%) and international funds (8%).
While trading activity among DC plan participants took a plunge, Alight says capital markets gathered positive results, especially with strong returns in large U.S. equity funds and international funds.