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Alight Solutions 401(k) Index™: 2023 Observations

Trading in 401(k) plans was light in 2023, with only 14 above-normal1 days, down significantly from 41 days in 2022. Net trading activity was down as well from 1.27% in 2022 to 0.82% in 2023. Historically, within the Alight Solution 401(k) IndexTM, trading increases as stocks fall. However, with rising markets in 2023, 401(k) investors were content to watch their balances increase and not make large trades.

Bond (48%) and money market (28%) funds saw the most trading inflows while almost two-thirds of trading outflows were from target date funds2 (39%) and company stock (24%).

Most contributions in 2023 went to target date funds2 and large cap U.S. equity funds. Equity gains resulted in investors ending 2023 with 70.5% of their portfolio in equities, compared to 68.2% at the beginning of the year.


Asset classes with most trading 

inflows in 2023

Percentage of inflows

Index dollar value ($mil)

Bond funds

48%

$883

Money market funds

28%

$504

Large U.S. equity funds

16%

$298

Asset classes with most trading 

outflows in 2023

Percentage of outflows

Index dollar value ($mil)

Target date funds2

39%

$704

Company stock

24%

$429

Stable value

17%

$316


Asset classes with most

 contributions in 2023

Percentage of contributions

Index dollar value ($mil)

Target date funds2

49%

$8,272

Large U.S. equity funds

21%

$3,476

International funds

7%

$1,198


Percentage of balances by asset class


Asset class

Year end 2023

Year end 2022

Change 

Money market

1.1%

1.0%

0.10%

Stable value

7.3%

9.6%

-2.30%

Bond

6.7%

7.4%

-0.70%

Balanced

1.3%

1.6%

-0.30%
Target date funds231.4%29.9%1.50%
Large cap U.S. equity
27.5%
25.7%
1.80%
Mid cap U.S. equity4.8%4.9%-0.10%
Small cap U.S. equity3.2%3.2%0.00%
International6.8%6.9%-0.10%
Emerging markets0.9%1.0%-0.10%
Specialty/sector0.4%0.4%0.00%
Company stock6.1%6.2%-0.10%
Self-directed brokerage2.5%2.3%0.20%

Asset class

Year end 2023

Year end 2022

Change 

Equity

70.5%

68.2%

2.3%

Fixed income

29.5%

31.8%

-2.3%

Index statistics

2023

Total transfers as percentage of starting balance

0.82%

# Fixed days

155 (62%)

# Equity days

95 (38%)

# Above normaldays14

The following table shows the returns of major market indices for the year ending December 31, 2023:

Returns for common indices

2023 

Bloomberg Barclays Capital U.S. Aggregate Bond Index

5.53%

S&P 500 Index

26.29%

Russell 2000 Index

16.93%

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

15.62%

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™: April 2024 Observations

Trading activity rose slightly in April with four above-normal1 days compared to just two in March, according to the Alight Solutions 401(k) IndexTM.

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

401(k) investors were active in Q1, logging 14 above-normal1 days, according to the Alight Solutions 401(k) Index™. The distribution of those days reveals a slowing trend, however, with eight taking place in January, followed by four in February and just two in March.

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

Trading activity was subdued in March with just two above-normal1 days, according to the Alight Solutions 401(k) Index™. Investors favored equity funds on 11 of 20 days.