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Alight Solutions 401(k) Index: January 2022 Observations

Against the backdrop of a volatile stock market, 401(k) investors were busy traders in January, according to the Alight Solutions 401(k) IndexTM. An average of 0.017% of balances were traded daily, the highest level since January 2021. January 2022 had 5 above-normal1 trading days—a stark increase from the 3 days seen in all of 2021. Two-thirds of days saw investors favoring moving assets into fixed income over equity. 

        
January observations: 

  • On average, 0.017% of 401(k) balances were traded daily.
  • 13 of 20 days favored fixed income funds.

The Alight Solutions 401(k) Index statistics for the month of January:

 

Index statistics

January

2022 YTD

 

Total transfers as percentage of starting balance

0.15%

0.15%

 

# Fixed days

13 (65%)

13 (65%)

 

# Equity days

7 (35%)

7 (35%)

 

# Above-normal days

5

5

 

Inflows and outflows during the month of January:

  • Trading inflows mainly went to stable value, bond, and money market funds.
  • Outflows were primarily from target date, large U.S. equity, and mid U.S. equity funds.

Asset classes with most trading

inflows in January

Percentage of inflows

Index dollar value ($mil)

 

Stable value funds

61%

$240

 

Bond funds

16%

$62

 

Money market funds

11%

$45

 

Asset classes with most trading

outflows in January

Percentage of outflows

Index dollar value ($mil)

 

Target date funds

44%

$174

 

Large U.S. equity funds

36%

$141

 

Mid U.S. equity funds

12%

$46

 

January investment portfolios:

  • After reflecting market movements and trading activity, average asset allocation in equities decreased from 70.7% in December to 70.0% in January.
  • New contributions to equities increased from 68.3% in December to 70.1% in January.

Asset classes with largest percentage of

total balance at the end of January

Percentage of balance

Index dollar value ($mil)

 

Target date funds

30%

$75,087

 

Large U.S. equity funds

27%

$67,916

 

Stable value funds

8%

$20,364

 

Asset classes with most

contributions in January

Percentage of contributions

Index dollar value ($mil)

 

Target date funds

46%

$751

 

Large U.S. equity funds

21%

$353

 

International equity funds

8%

$130

 

Returns for common indices

January

2022 YTD

 

Bloomberg Barclays U.S. Aggregate Index

2.15%

2.15%

 

S&P 500 Index

5.17%

5.17%

 

Russell 2000 Index

9.63%

9.63%

 

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

3.69%

3.69%

 

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™

Monthly and quarterly Alight Solutions 401(k) Index Reports

Alight Solutions 401(k) Index: April 2022 Observations

There were no above-normal1 days in April. However, net transfers in April were up slightly compared to March (.10% vs .09%) as investors moved money out of equities and into fixed income.

Alight Solutions 401(k) Index™: July 2021 Observations

July was another light month of trading in 401(k) plans, according to the Alight Solutions 401(k) Index TM. Net trading activity in July was 0.07% of balances, a slight increase from 0.06% in June, but well below the trailing five-year average of 0.21%.