Self-directed 401k investors’ balances declined with the market in the second quarter of 2022, according to the latest edition of the Charles Schwab SDBA Indicators Report, an industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts (SDBAs).
The report, released today, found the average account balance across all participant accounts finished at $283,485 for the second quarter ending June 30, an 18.58% decrease year-over-year and a 14.62% decrease from the first quarter of 2022.
The Q2 SDBA Indicators reflected another volatile period for markets prior to the July/August market recovery. In the second quarter, the S&P 500 hit its lowest level since December 2020 as still-high inflation, sharp increases in interest rates, rising recession risks, and ongoing geopolitical unrest pressured stocks and other assets.
Against this backdrop, equity allocations decreased to 33% of assets, down from 37% last year and 36% in the first quarter. Cash allocations increased to 15% of assets, up from 12% last year and 13% in the first quarter.
Overall, participant holdings remained similar to the previous quarter. Equities remained the largest holding. The largest equity sector holding was Information Technology at 29.1%. The top equity holdings were again Apple (12.0%), Tesla (8.1%), Amazon (4.4%) Microsoft (3.4%) and NVIDIA (1.9%).
Mutual funds were the second largest holding at 28.8%, with the largest allocation going to large-cap stock funds at 33.9%. They were followed by taxable bond (20.0%) and international (14.2%) funds.
ETFs held 20.9% of participant assets. Among ETFs, investors continued to allocate the most dollars to U.S. equity (50.9%), followed by fixed income (13.8%), international equity (13.1%) and sector (12.0%) ETFs.
More report highlights
• Advised accounts held higher average account balances compared to non-advised accounts, $460,376 vs. $240,974.
• Gen X had the most advised accounts at 50.0%, followed by Baby Boomers (31.5%) and Millennials (15.4%). Gen X made up approximately 46% of SDBA participants, followed by Boomers (30%) and Millennials (19%). Boomers had the highest SDBA balances at an average of $452,381, followed by Gen X at $252,477 and Millennials at $85,121.
• Trading volumes were lower at an average of 11 trades per account compared to 14 last quarter and a year ago.
• On average, participants held 13 positions in their SDBAs at the end of Q2 2022, consistent with the previous quarter and similar to last year.
SDBAs are brokerage accounts within retirement plans, including 401ks 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, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.
SEE ALSO:
• Self-Directed 401k Balances Down in Q1: Schwab Report
• Fidelity Q2 Analysis Shows Just How Hard Stock Losses Hit 401ks
• Why 401k Plan Sponsors Increasingly Eye Self-Directed Brokerage Accounts
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
