ith just one above-normal1 day in January, 401(k) plan investors began 2023 with light trading, according to the Alight Solutions 401(k) IndexTM. Just 0.011% of balances were traded daily, the lowest January since the 401(k) Index was launched in 1997. Bond funds accounted for the highest level of inflows, while most outflows came from target date funds2 and company stock. New contributions to equities increased to 68.2% following December’s six-year low of 66.1%
January observations:
- On average, 0.011% of 401(k) balances were traded daily.
- 16 of 20 days favored fixed income funds.
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Inflows and outflows during the month of January:
- Trading inflows mainly went to bond, emerging markets and money market funds.
- Outflows were primarily from target date funds2, company stock and large U.S. equity funds.
Asset classes with most trading inflows in January | Percentage of inflows | Index dollar value ($mil) |
Bond funds | 82% | $151 |
Emerging market funds | 8% | $15 |
| Money market funds | 8% | $15 |
Asset classes with most trading outflows in January | Percentage of outflows | Index dollar value ($mil) |
Target date funds2 | 56% | $102 |
Company stock | 12% | $21 |
| Large U.S. equity funds | 11% | $19 |
January investment portfolios:
- After reflecting market movements and trading activity, average asset allocation in equities increased from 68.2% in December to 68.9% in January.
- New contributions to equities increased from 66.1% in December to 68.2% in January.
Asset classes with largest percentage of total balance at the end of January | Percentage of balance | Index dollar value ($mil) |
Target date funds2 | 30% | $71,102 |
Large U.S. equity funds | 26% | $61,159 |
Stable value funds | 9% | $21,168 |
Asset classes with most contributions in January | Percentage of contributions | Index dollar value($mil) |
Target date funds2 | 48% | $764 |
Large U.S. equity funds | 21% | $327 |
International equity funds | 7% | $115 |
January market observations:
Returns for common indices | January | 2023 YTD |
Bloomberg Barclays U.S. Aggregate Index | 3.08% | 3.08% |
S&P 500 Index | 6.28% | 6.28% |
Russell 2000 Index | 9.75% | 9.75% |
MSCI All Country World ex-U.S. Index (net) | 8.11% | 8.11% |
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.
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