Fixed Income Funds Took in Majority of 401(k) Participant Transfers in February

February was a slow trading month for 401(k) investors, according to the Alight Solutions 401(k) Index. There were only three trading days of above-normal trading activity.

When participants did make trades, they overwhelmingly favored fixed income over equities. On 89% of the trading days, or 17 days, investors moved the majority of their money into fixed income. Only 11% of the trading days or two days, favored equities. During the month of February, investors moved a mere 0.19% of their 401(k) balances. Year-to-date, they have moved 0.34% of their balances.

Asset classes with the most trading inflows were bond funds, which took in 45% of all inflows, or $168 million, followed by stable value funds (30% and $112 million) and money market funds (7% and $26 million).

Asset classes with the most trading outflows were large U.S. equity funds (58% and $217 million), company stock (36% and $134 million) and international funds (5% and $18 million).

Average asset allocation in equities ticked upward to 67.9% at the end of February, up from 67.6% the month before. New contributions in equities remained unchanged at 67% in February.

Asset classes with the largest percentage of total balance at the end of February were target-date funds (TDFs) (28%; $57.9 billion), large U.S. equity funds (25%; $50.7 billion) and stable value funds (10%; $21.1 billion).

Asset classes with the most contributions in February were TDFs (44%; $737 million), large U.S. equity funds (19%; $314 million) and company stock (7%; $116 million).

During the month of February, large U.S. equities gained 3.2%, small U.S. equities increased by 5.2%, international equities were up 2.0% and the U.S. bond market ticked downward by 0.1%.