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Alight Solutions 401(k) Index™: 2022 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 stock

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 class

Year end 2022

Year end 2021

Change

Money market

1.0%

0.8%

0.2%

Stable value

9.6%

7.7%

1.9%

Bond

7.4%

7.0%

0.4%

Balanced

1.6%

1.7%

-0.1%

Target date funds2

29.9%

29.6%

0.3%

Large cap U.S. equity

25.7%

27.5%

-1.8%

Mid cap U.S. equity

4.9%

5.2%

-0.3%

Small cap U.S. equity

3.2%

3.5%

-0.3%

International

6.9%

6.7%

0.2%

Emerging markets

1.0%

1.4%

-0.4%

Specialty/sector

0.4%

0.4%

0.0%

Company stock

6.2%

6.0%

0.2%

Self-directed brokerage

2.3%

2.6%

-0.3%

 

 

 

 

Asset class

Year end 2022

Year end 2021

Change

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:

Return for common indices

2022

Bloomberg Barclays Capital 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.A. 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.

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.

Related Insights


Alight Solutions 401(k) Index™: January 2023 Observations

With just one above-normal day in January, 401(k) plan investors began 2023 with light trading, according to the Alight Solutions 401(k) Index™.

Alight Solutions 401(k) Index™: December 2022 Observations

December was the second lightest trading month in 2022

Alight Solutions 401(k) Index™: October 2022 Observations

October was another light trading month for 401(k) plan investors, according to the Alight 401(k) Index™.