401(k) investors move to cash, bonds in September
Investors shifted their 401(k) plan allocations from stocks to bonds and cash in September, according to a report. analysis By Alight, a retirement plan administrator; behavior that could be financially dangerous, depending on the justification.
Rob Austin, Alight’s head of thought leadership, said overall account transactions among 401(k) investors were low for the month, indicating most people aren’t actively moving money or trying to time the market.
“[But] “When people trade, they’ve moved from stocks to fixed income,” Austin said. “There’s a flight to bonds, money markets and stable value. [funds]”
Nearly every day of the month net-traded bonds favored stable-value funds or money market funds, according to Alight’s analysis based on 401(k) trading activity of more than 2 million people with more than $200 billion in total assets. These are more conservative asset classes than stocks.
The analysis noted that although the stock market posted record highs, investors showed a “clear preference for safer options.”
Specifically, Alight saw net 401(k) money flowing into fixed income on 20 of 21 days.
Bond, stable value and money market funds accounted for 82% of all investor inflows in September: Alight found that bond funds captured 39% of fund inflows, with 25% of net investor money flowing into stable value and 18% into money market funds.
By comparison, 38% of outflows came from large-cap U.S. stock funds, 28% from corporate stocks and 12% from small-cap stock funds, according to the data.
The analysis does not show what is driving the migration from stocks to bonds.
Austin said investors may have been worried about the direction of the U.S. economy in September (as the possibility of a government shutdown grew and the job market showed signs of weakness, for example) as they were “trying to tighten their belts.”
“A shift from equities to fixed income may indicate some protection against market fluctuations,” Austin said.
Financial advisors generally advise investors not to try to time the market; They say this behavior can lead to bad financial consequences, such as buying stocks when prices are high and locking in losses by selling at a low point.
“Remember that no one can really time the market well, and it’s best to focus long-term on what you’re trying to accomplish,” Austin said.
However, there may also be a more positive explanation.
S&P 500 The U.S. stock index was up nearly 13% in 2025 as of noon ET on Monday. Austin said the shift to bonds could be an indication that investors are starting to rebalance their asset allocations to avoid becoming too stock-intensive.
