Despite market volatility brought on by the coronavirus pandemic, investors with Vanguard Group haven’t been inclined to make changes to their taxable and retirement accounts, the Philadelphia Business Journal reported on Monday.
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In fact, over 90% of individual investors made no changes to their accounts, PBJ said, citing a report from Vanguard. DC investors were the least likely to make changes to their accounts, the report noted.
Just over 8% of investors made trades between Feb. 19 and March 20, and even those were limited. Half of those investors made a single trade; less than a third made three or more. Furthermore, most—70%—moved assets into equities rather than fixed income.
However, Vanguard noted that flows into fixed income have been positive since Feb. 19, the market top, especially among wealthier households.
“This suggest that older and/or wealthier households are more likely (by a small margin) to sell into stock market declines, while the typical household ‘buys on the dips,'” the report noted. “Consistent with longer term trends, households that have only a defined contribution relationship with Vanguard exhibited the lowest levels of trading.”
Vanguard found just 2.5% of traders with only a DC plan at the firm, and 6.2% of those with only an IRA, made changes to their account. By comparison, 9.5% of traders who had only a taxable account at Vanguard made a change.
Traders were far more likely to make changes if they had multiple accounts. Nearly 17% of investors who had a retirement account (DC or IRA) and a taxable account, and 24.5% of investors with an IRA and a taxable account, made trades.
“On balance, we believe these levels of trading indicate that the vast majority of investors are maintaining a long-term perspective despite market turmoil,” according to the report.
Danielle Andrus works as an editor for The Financial Planning Association® (FPA®). Over the past 15 years, she has worked in various capacities, including writing and editing. Andrus has worked for several notable publications and outlets and spent more than seven years as the executive managing editor at ALM Media, publisher of Investment Advisor magazine and ThinkAdvisor.com. Before that, she was online editor for Summit Professional Networks, where she oversaw newsletter development for four magazines, including Benefits Selling, Senior Market Advisor, Boomer Market Advisor, and Bank Advisor.
