Practice Management
The average 401(k) balance did pretty well in 2019 – but how did participants respond?
Well, according to the Alight Solutions 401(k) Index, while 2019 had only 25 days of above-normal daily transfer activity – much lower than 2018’s total of 46 days – the net trading activity was the highest Alight has seen since 2013, at 2.29%.
That said, most participants didn’t transfer money in 2019, a (non-) trend that has persisted over the years, despite the ready, daily access most have to do so.
That said, most participants didn’t transfer money in 2019, a (non-) trend that has persisted over the years, despite the ready, daily access most have to do so.
All told, 86% of the trading days saw net trading activity move from equities to fixed income. Which, of course, might suggest that some didn’t realize the full positive impact of the 2019 markets. Similarly, 55 of the 64 trading days in the fourth quarter saw net trading dollars moving from equities, although there was only one “above-normal” trading day in the last quarter of the year.
By way of reference, 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 Alight Solutions 401(k) Index™ equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.
By way of reference, 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 Alight Solutions 401(k) Index™ equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.
In 2019, most of the money that did move between funds ($2,398 million) – 55% - went to bond funds, with another quarter (27%) transferred to stable value funds, and the remaining 13% to money market options.
To and From
Not surprisingly, in 2019 that money came from:
49% - large U.S. equity funds
34% - company stock
8% - small U.S. equity funds
34% - company stock
8% - small U.S. equity funds
In the fourth quarter, money went to bond funds (46%), stable value funds (23%), and money market funds (10%) – and came from company stock (49%), large U.S. equity funds (31%), and small U.S. equity funds (8%).
As for new contributions in 2019, those were invested in:
As for new contributions in 2019, those were invested in:
47% - target date funds
20% - large U.S. equity funds
7% - international funds
20% - large U.S. equity funds
7% - international funds
- Log in to post comments