401(k) investors rushed to safe havens in the second quarter
- - - 401(k) investors rushed to safe havens in the second quarter
Kerry HannonJuly 11, 2025 at 10:06 PM
Retirement investors were not content to ride out the second quarter’s choppy market, according to Alight Solutions’ 401(k) Index.
Trading levels in these retirement accounts hit the highest levels in five years, as investors in 401(k)s actively shifted funds from stocks to fixed income.
People pulled large sums of 401(k) money mostly from target-date funds — to my dismay. Some folks swapped company stock and midsize US equity funds for more conservative bonds and to a lesser extent money market funds and stable value funds.
Investors, in fact, swapped their equities for fixed income on 40 out of 61 trading days, with 42% of inflows going to bonds, according to the data.
Read more: What is a 401(k)? A guide to the rules and how it works.
“These moves towards fixed income investments reflect a desire among investors to reduce volatility in their retirement accounts,” Rob Austin, head of thought leadership at Alight Solutions, told Yahoo Finance. “While some reacted to market swings, others took a more measured approach, rebalancing their portfolios to meet target allocations, especially since equities outperformed fixed income in the second quarter.”
The tide began to turn in June when trading activity hit the brakes, compared to April and May, Austin said. New contributions to equities ticked up from 70% to 70.4%, and international equities topped the list for net inflows for equities.
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These findings are in sharp contrast to Fidelity Investments’ first quarter analysis.
“We saw a lot of positive savings behaviors among employees,” Mike Shamrell, vice president of workplace thought leadership at Fidelity Investments, said at the time.
“It was really encouraging to see that despite a lot of things going on, and economic ups and downs, people continued to save and didn’t pull back, or make a lot of changes to their asset allocation,” he said.
So much for that.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming "Retirement Bites: A Gen X Guide to Securing Your Financial Future," "In Control at 50+: How to Succeed in the New World of Work," and "Never Too Old to Get Rich." Follow her on Bluesky.
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