Average account balances among retirement plan participants with self-directed brokerage accounts (SDBAs) with Charles Schwab increased 6.6% to $298,543 during the first quarter of 2023 compared to Q4 2022. That’s still down by 10.08% compared to $332,017 a year ago for all participants in the Schwab Personal Choice Retirement Account.
The increase, reported today in Schwab’s Q1 SDBA Indicators Report, reflected growth in the markets for a second straight quarter. Despite turbulence later in the quarter, the report noted the S&P 500, building on a late 2022 rally, gained 7% while the Nasdaq Composite rose 16.8% and the Dow Jones Industrial Average eked out a small gain, increasing 0.4%.
The report, an industry-leading benchmark on retirement plan participant investment activity within SDBAs, shows Baby Boomers had the highest SDBA balances at an average of $482,586, followed by Gen X at $274,940 and Millennials at $94,996. Gen X made up 46% of SDBA participants, followed by Boomers (28%) and Millennials (20%).
Advised accounts held higher average account balances compared to non-advised accounts, $478,263 vs. $254,874. Gen X had the most advised accounts (51%), followed by Boomers (29%) and Millennials (17%).
Apple remains top equity holding
Participant holdings remained similar to the fourth quarter. Equities remained the largest holding at 32.7% with Information Technology still the largest allocation within the equity sector at 29.1%. The top four equity holdings remained Apple (12.9%), Tesla (7.7%), Amazon (4.1%) and Microsoft (3.5%) while NVIDIA (3.0%) replaced Berkshire Hathaway (2.0%) in the top five.
Mutual funds were the second largest holding at 29.4%, with the largest allocation going to large-cap stock funds at 32.2%. They were followed by taxable bond (17.2%) and international (13.5%) funds. Allocations to money market funds increased by 3.5% from last quarter and 8% from last year.
Exchange-Traded Funds (ETFs), comprised of Large Caps, Mid Caps and Small Caps, held 22.3% of participant assets. Among ETFs, investors continued to allocate the most dollars to U.S. equity (50.8%), followed by fixed income (14.1%), international equity (13.5%) and sector (10.6%) ETFs.
The report also found that 4.4% of assets were held in fixed income, similar to last quarter and higher than 1.3% a year ago.
Trading volumes, at 11 per account on average, were lower than a year ago but slightly higher than last quarter. On average, participants held 12.6 positions in their SDBAs at the end of Q1 2023, similar to the previous year and the previous quarter.
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