Retirement investors are shifting their strategy, turning their attention overseas and putting more money into international stocks and emerging markets, according to a recent analysis of 401(k) activity.
While overall trading in retirement accounts was quiet in January, international equity funds captured 45% of new equity investments, while emerging markets attracted another 33%. This movement surpassed investments in US equity categories. At the same time, investors pulled the most money—59%—from large US equity funds.
This marks a significant change from last year’s pattern. “It’s a meaningful shift in investor behavior,” said a lead analyst at the firm behind the index. “For the past year, investors were consistently pulling more money out of equity funds than they were putting in, which usually signals caution or a desire to de-risk.”
Overall, last year 401(k) savers played it safe, moving investments into conservative assets like bonds. However, don’t be fooled by some money leaving target-date funds; they remain the largest asset class for retirement savers and actually received the biggest chunk of new contributions in January.
This shift back toward equities is notable. Of the trading days last month, most favored stocks over fixed income. New contributions to equities also increased. “Participants weren’t just reallocating within equities, they were trading new money to the asset class,” the analyst noted.
The move into international equities suggests that retirement investors may be looking for opportunities beyond the volatility of US markets. While US stocks had a strong performance in 2025, global markets did even better. A major index tracking global equities outside the US gained nearly 30%, significantly outpacing the S&P 500.
“Last year was the first time since 2009 where emerging markets and international stocks beat the S&P 500,” a certified financial planner commented. “It’s a good time to consider adding international exposure to your 401(k) if you haven’t already.”
Several factors are supporting global markets this year, including the artificial intelligence boom and a weaker US dollar. When the dollar weakens, investments in other currencies can become more valuable when converted back.
The reason for this shift in investor behavior isn’t entirely clear, but it could be an early sign that confidence is improving. Combined with the strong interest in international markets, it suggests investors are once again willing to take on risk in search of growth.