The average self-directed brokerage account balance finished Q1 2020 at $252,675, down 6% year-over-year and down 14% from Q4 2019 according to Charles Schwab’s latest SDBA Indicators Report.
The average balance across all SDBA participant accounts finished 2019 at $294,105.
The benchmark report is focused on retirement plan participant investment activity within SDBAs, which are brokerage accounts within retirement plans including 401ks and other types of retirement plans, that participants can use to invest retirement savings in stocks, bonds, exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.
The first quarter SDBA Indicators Report also showed trading volumes increased compared to the previous quarter, at an average of 13 trades per account up from seven in Q4 2019, which is in line with broader investor activity seen during the first quarter as major stock indexes fell and trading activity rose amid market volatility.
Asset allocations remained similar to last quarter, with the exception of an increase in cash holdings from 12% in Q4 2019 to 19% in Q1. Mutual funds continue to hold a majority of participant assets (34%), followed by equities (27%), cash (19%), ETFs (17%), and fixed income (3%).
Allocation trends
The data also reveals specific sector holdings within each investment category:
- Mutual funds: Large-cap funds had the largest allocation at approximately 30% of all mutual fund allocations, followed by taxable bond (22%) and international (14%) funds.
- Equities: Information technology remained the largest equity sector holdings at 29%, up from 27% last quarter. Apple (AAPL) continues to be the top overall equity holding, comprising 11% of the equity allocation of portfolios. The other equity holdings in the top five include Amazon (AMZN) (6.5%), Microsoft (MSFT) (3.6%), Berkshire Hathaway (BRKA) (2.5%), and Tesla (TSLA) (2.1%).
- ETFs: Among ETFs, investors allocated the most dollars to U.S. equity (48%), followed by U.S. fixed income (18%), international equity (13%) and sector ETFs (10%).
More report highlights
- On average, participants held 10 positions in their SDBAs at the end of Q1 2020, which has remained steady both year-over-year and quarter-over-quarter.
- Gen X made up approximately 43% of SDBA participants, followed by Boomers (37%) and Millennials (14%).
- Boomers had the highest SDBA balances at an average of $367,425, followed by Gen X at $199,071 and Millennials at $65,207.
- Gen X had the most advised accounts at 45%, followed by Boomers (41%) and Millennials (11%).
Schwab Stock Slices debut
Schwab also announced that its new Schwab Stock Slices service is now available in the Schwab Personal Choice Retirement Account, the firm’s SDBA offering. Schwab Stock Slices lets investors own any of America’s leading companies in the S&P 500 for as little as $5 each, even if their shares cost more.
Investors can use the new service to purchase a single stock slice or up to 10 different stock slices at once, and they can hold slices of as many S&P 500 companies in their account as they wish through multiple purchases. Schwab Stock Slices are purchased commission-free online.
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.
