401(k) plan investors were light traders in the final quarter of 2022, according to the Alight Solutions 401(k) IndexTM. There were three above-normal1 trading days in the quarter, down from five above-normal1 days seen in Q3. Most days (77%) favored fixed income with stable value funds receiving the highest percentage of inflows (52%). Target date funds2 (42%) and company stock (34%) had the most outflows for the quarter.
Fourth quarter observations:
- Net transfers for the quarter were 0.31% of balances.
- 48 out of 62 trading days in the fourth quarter had net trading dollars moving from equities to fixed income.
Alight Solutions 401(k) Index™ statistics for Q4 2022 and year-to-date: | ||
Index statistics | Q4 2022 | 2022 YTD |
Total transfers as percentage of starting balance | 0.31% | 1.27% |
# Fixed days | 48 (77%) | 183 (73%) |
# Equity days | 14 (23%) | 67 (27%) |
# Above-normal1 days | 3 | 41 |
Asset classes with most trading inflows in Q4 2022 | Percentage of inflows | Index dollar value ($mil) |
Stable value funds | 52% | $338 |
Bond funds | 24% | $156 |
Money market funds | 19% | $123 |
Asset classes with most trading outflows in Q4 2022 | Percentage of outflows | Index dollar value ($mil) |
Target date funds2 | 42% | $274 |
Company stock | 34% | $220 |
International equity funds | 9% | $58 |
First quarter market observations:
Returns for common indices | Q4 2022 | 2022 YTD |
Bloomberg Barclays U.S. Aggregate Index | 1.87% | -13.01% |
S&P 500 Index | 7.56% | -18.11% |
Russell 2000 Index | 6.23% | -20.44% |
MSCI All Country World ex-U.S. Index (net) | 14.28% | 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.
2 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
