Participants Continue Movement Out of Equities

The third quarter saw 401(k) investors continue to trade money from equities to fixed-income funds, according to the Alight Solutions 401(k) Index. This marks the seventh consecutive quarter where net trades favored fixed-income funds over equity funds.

During the third quarter, 401(k) investors traded 0.61% of their starting balances. Year-to-date, they have traded 1.77% of their balances. Fifty-four of 64 trading days in the third quarter had net trading dollars moving from equities to fixed income. Net equity trading days only totaled 10. Year-to-date, 401(k) investors have moved the majority of their money into fixed income on 161 days, whereas they moved the majority of their money into equities on only 27 days.

In the third quarter, there were only eight above-normal trading days. Year-to-date, there have been 24.

Asset classes with the most trading inflows in the third quarter were bond funds, taking in $605 million, or 47% of the inflows, followed by stable value funds ($394 million, 30%) and money market funds ($207 million, 16%). Asset classes with the most trading outflows were large U.S. equity funds ($643 million, 49%), company stock ($359 million, 28%) and small U.S. equity funds ($109 million, 8%).

In the third quarter, equity markets were mixed. U.S. bonds were up 2.3%. Large U.S. equities gained 1.7%. Small U.S. equities fell by 2.4%, and international equities lost 1.8%.