With Market Gains, Participant Transfers Favor Fixed Income in October

October saw gains broadly for capital market indices, but for 401(k) plan participant transfers, 21 out of 23 days saw net trading move from equity to fixed income.

In its October 2019 401(k) Index, Alight Solutions notes that October saw gains broadly for capital market indices, with international equities (represented by the MSCI All Country World ex-U.S. Index) rising 3.5%, small U.S. equities (represented by the Russell 2000 Index) gaining 2.6%, large U.S. equities (represented by the S&P 500 Index) advancing 2.2% and U.S. bonds (represented by the Bloomberg Barclays U.S. Aggregate Index) earning 0.3%.

The overwhelming majority of days—21 out of 23—saw net trading activity move from equities to fixed income funds. In addition, new contributions to equities decreased from 67.5% in September to 67.4% in October.

Trading inflows mainly went to stable value (41% or $176 million), bond (30% or $130 million) and money market (16% or $67 million) funds. Outflows were primarily from company stock (52% or $222 million), large U.S. equity (32% or $135 million) and small U.S. equity (8% or $33 million) funds.

After reflecting market movements and trading activity, average asset allocation in equities increased from 67.1% in September to 67.3% in October.

October was a light trading month, though, with only one above normal trading day. On average, 0.015% of 401(k) balances were traded daily.