Another Solid Quarter for Self-Directed 401(k)s

Brian Anderson

4 months ago

Self-directed brokerage account balances rose nearly 6% compared to a year ago as equity markets continued to rally in the second quarter, finds Charles Schwab’s latest SDBA Indicators Report, released today.

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The industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts (SDBAs) found the average account balance across all participant accounts finished at $335,008 for the second quarter of 2024, up by 5.7% year-over-year and a 2.1% increase from the first quarter of 2024.

SDBAs are brokerage accounts within workplace retirement plans, including 401(k)s and other types of retirement plans, that participants can use to invest retirement savings in individual stocks and bonds, as well as exchange-traded funds (ETFs), mutual funds and other securities that are not part of their retirement plan’s core investment offerings.

Allocation trends

Overall, the Schwab report found participant holdings in the second quarter of 2024 were similar to the first quarter.

Equities: Equities remained the largest holding at 34.9%. The largest equity sector holding was Information Technology at 37.9% and Nvidia was the largest individual stock holding (11.1%). Apple (10.7%), Amazon (5.2%), Tesla (5.1%) and Microsoft (4.1%) remained top equity holdings.
Mutual funds: Mutual funds remained the second largest holding at 28.1%, with the largest allocation going to large-cap stock funds at 34.2%, followed by money market funds (16.2%) and taxable bond funds (14.2%).
ETFs: ETFs held 24.7% of participant assets. Among ETFs, investors continued to allocate the most dollars to U.S. equity (51.8%), followed by U.S. fixed income (12.7%), international equity (11.9%) and sector (9.3%) ETFs.
Cash and Fixed Income: Cash and equivalents held 7.4% of participant assets while 5.0% of assets were held in fixed income.

More report highlights

Advised accounts held higher average account balances compared to non-advised accounts, $528,287 vs. $293,455.
Gen X had the most advised accounts (52%), followed by Baby Boomers (24%) and Millennials (22%).
Gen X made up approximately 47% of SDBA participants, followed by Baby Boomers (26%) and Millennials (25%).
Boomers had the highest SDBA balances at an average of $548,353, followed by Gen X at $329,089 and Millennials at $115,867.
On average, participants held 11.8 positions in their SDBAs at the end of the second quarter of 2024, the same as the first quarter of 2024 and slightly lower than the second quarter of 2023.
Trading volumes averaged 12 trades per account, similar to the first quarter of 2024 and slightly higher than the second quarter of 2023.

The SDBA Indicators Report includes data collected from approximately 290,000 retirement plan participants who currently have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account. Data is extracted quarterly on all accounts that are open as of quarter-end and meet the balance criteria.