A Drop Off in Volatility in January Led to Scant Trading

With market volatility slowing in January, trading activity among 401(k) investors dropped off, according to the Alight Solutions 401(k) Index. In fact, January 2019 was the slowest start to the year in the more than 20-year history of the index.

The average daily activity for the month was 0.016%, lower than the 0.024% in January 2018 and the trailing five-year average of 0.025%.

Seventeen of 21 trading days, or 81%, favored fixed income funds. A mere four, or 19%, favored equities. During the month, there were only three above-normal trading days.

Inflows went mainly to bond (79%), small U.S. equity (8%) and stable value funds (6%). Outflows came primarily from large U.S. equity 43%), target-date funds (23%) and company stock funds (22%).

The average asset allocation in equities ticked upward to 67.6% at the end of January from 66.6% at the end of December. New contributions to equities also ticked upward, to 67.7% in January from 66.7% the month before.

Asset classes with the largest percentage of total balance at the end of January were target-date funds (28%), large U.S. equity funds (25%) and stable value funds (11%).

Asset classes with the most contributions in January were target-date funds (47%), large U.S. equity funds (19%) and international funds (8%).

U.S. bonds rose 1.1% in the month, large U.S. equities rose 8.0%, small U.S. equities gained 11.3%, and international equities were up 7.6%.