Retirement investors are turning their attention overseas and putting more money into international stocks and emerging markets, according to Alight Solutions’ 401(k) Index.
While trading levels in retirement accounts were muted, with no above-normal trading days in January, international equity funds soaked in 45% of equity inflows, while emerging markets attracted 33%, surpassing US equity categories. People pulled the most money — 59% — from large US equity funds, followed by stable value funds and company stock funds, according to the index.
That’s a big switch from last year’s pattern. “It’s a meaningful shift in investor behavior,” Rob Austin, head of thought leadership at Alight Solutions, told Yahoo Finance. “For the past year, investors were consistently pulling more money out of equity funds than they were putting in. This usually signals caution, uncertainty, a desire to de‑risk, or just rebalancing in a rising equity market.”
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Overall, last year 401(k) savers played it safe and moved their investments into conservative assets like bonds, pulling large sums of 401(k) money mostly from target-date funds, company stock, and midsize US equity funds.
Don’t be fooled by people pulling money from their target-date funds, though. These funds remain the largest asset class for 401(k) savers. In fact, the biggest chunk of contributions in January went into target-date funds.
Nearly all 401(k) plan sponsors and most state auto-IRA programs use target-date funds when they automatically enroll workers in a retirement plan.
This shift back to investing in equities is worth noting. Of 20 trading days last month, 12 favored equities over fixed income, according to the index. New contributions to equities increased to 73% in January from 70.1% in December.
“Participants weren’t just reallocating within equities, they were trading new money to the asset class,” Austin said.
The dip into international equities, however, is a sign that 401(k) retirement investors may be spooked by the volatility in US equities in the past year and are seeking longer-term global opportunities, the financial advisers I interviewed suggested.
No one is knocking having US equities in your retirement accounts, mind you. US stocks had a sweet 2025. But global markets were even better. A major index tracking roughly 85% of global equity outside US stocks, the MSCI All Country World ex-USA Index, gained 29.2% in 2025 compared to the S&P 500’s gain of 17.9%. And it was up 6% last month while the S&P 500 gained 1.4%.