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Alight Solutions 401(k) Index™: 2022 Observations

Alight Solutions 401(k) IndexTM: July 2024 Observations

Steady losses on Wall Street throughout 2022 saw 401(k) investors seek the safety of fixed income investments, according to the Alight Solutions 401(k) IndexTM. Net trading activity for the year was 1.27% — higher than 2021’s level of 0.53% but lower than 2020’s level of 3.52%. There were 41 days of above-normal1 activity, compared to three in 2021. 

“Throughout the more than 25-year history of the 401(k) Index, we have seen people increase their trading activity when stocks drop — a trend that continued in 2022,” said Rob Austin, head of research at Alight. “More than three-quarters of the above-normal1 trading days (33 out of 41) happened during the first half of the year when the markets were down by 20%. Trading slowed in the second half as Wall Street tried to rally.”

401(k) investors remained bullish on equities with most contributions going to target date funds2, and large cap U.S. equity funds. However, the equity losses resulted in people ending 2022 with 68.2% of their portfolio in equities compared to 70.7% at the beginning of the year.  



Asset classes with most trading 

inflows in 2022

Percentage of inflows

Index dollar value ($mil)

Stable value funds

76%

$2,537

Money Market

15%

$503

Bond Funds

8%

$254

Asset classes with most trading 

outflows in 2022

Percentage of outflows

Index dollar value ($mil)

Target date funds2

53%

$1,769

Large U.S. equity funds

16%

$541

Company Stocks

12%

$405


Asset classes with most 

contributions in 2022

Percentage of contributions

Index dollar value($mil)

Target date funds2

47%

$4,942

Large U.S. equity funds

21%

$2,229

International funds

7%

$762


Percentage of balances by asset class

Asset classYear end 2022Year end 2021Change
Money market1.0%0.8%0.2%
Stable value9.6%7.7%1.9%
Bond7.4%7.0%0.4%
Balanced1.6%1.7%-0.1%
Target date funds229.9%29.6%0.3%
Large cap U.S. equity25.7%27.5%-1.8%
Mid cap U.S. equity4.9%5.2%-0.3%
Small cap U.S. equity3.2%3.5%-0.3%
International6.9%6.7%0.2%
Emerging markets1.0%1.4%-0.4%
Specialty/sector0.4%0.4%0.0%
Company stock6.2%6.0%0.2%
Self-directed brokerage2.3%2.6%-0.3%




Asset class

Year end 2022

Year end 2021Change

Equity

68.2%

               70.7%    -2.5%

Fixed income

31.8 %

               29.3%     2.5%


Index statistics

2022

Total transfers as percentage of starting balance

1.27%

# Fixed days

184 (73%)

# Equity days

67 (26%)

# Above-normal1 days

41

The following table shows the returns of major market indices for the year ending December 31, 2022:

Returns for common indices

2022

Bloomberg Barclays U.S. Aggregate Bond Index

-13.01%

S&P 500 Index

-18.11%

Russell 2000 Index

-20.44%

MSCI All Country World ex-U.S. Index (net)

-16.00%

1 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. A “high” relative transfer activity day is when the net daily movement exceeds two times the average daily net activity. A “moderate” relative transfer activity day is when the net daily movement is between 1.5 and 2 times the average daily net activity of the preceding 12 months.

Target date funds also include the amounts in target risk funds. The amount in the target risk funds is less than 10% of the total.

Related Insights


Alight Solutions 401(k) Index™: September 2024 Observations

Trading activity was light in September with just two above-normal1 days, according to the Alight Solutions 401(k) IndexTM. When investors were active, however, there was a flight to safety, as fixed income funds experienced net inflows on 18 of the 20 trading days.

Alight Solutions 401(k) Index™: Third Quarter 2024 Observations

401(k) investors concentrated their trading activity to a handful of days in Q3, according to the Alight Solutions 401(k) IndexTM.

Alight Solutions 401(k) Index™: August 2024 Observations

401(k) investors were active traders in early August when Wall Street had its worst day in nearly two years. Activity slowed significantly afterward with just three above-normal1 days, according to the Alight Solutions 401(k) IndexTM.