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.