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Bumpy Markets Jostled Participant Trades in Q3

GIC/stable value and money market funds benefited from 401(k) participants fleeing company stock and target-date funds in September, according to a new report.

Despite its historic (and current) volatility, September turned out to be another light month of trading for 401(k) investors, with 0.14% of total balances traded in the month and just one day of above-normal trading activity, according to the AonHewitt 401(k) Index. The index tracks the 401(k) trading activities of nearly 1.3 million participants, representing nearly $160 billion in collective assets.

The third quarter saw ebbs and flows in trading activity for 401(k) investors. The quarter began with high trading activity driven by market volatility in the wake of the Brexit vote. Indeed, August was one of the lightest trading months on record while September saw more of a return to normal activity.

Trades in the third quarter generally favored fixed income over equities with GIC/stable value, bond, and money market funds receiving the majority of the inflows and large U.S. equity funds, company stock, and small U.S. equity funds having the most outflows.

According to the AonHewitt 401(k) Index, GIC/stable value funds received 51% of the funds transferred by participants during the month, with money market funds representing another 27%. Nearly half (41%) of that came from company stock funds, with another 36% from large U.S. equity funds, and another 10% from target-date funds.

Contributions continued to favor target-date funds (42%) and large U.S. equity funds (19%).