The markets bouncing back from the sharp losses experienced at the end of 2018 helped the average self-directed brokerage account (SDBA) balance rebound to $267,609 at the end of Q1 2019, an increase of 8.7% from Q4 2018.
This according to Charles Schwab’s latest SDBA Indicators Report, a benchmark on retirement plan participant investment activity within SDBAs, or brokerage accounts within retirement plans including 401ks, which participants can then use to invest in stocks, bonds, exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.
According to the Schwab data, mutual funds continued to hold the highest percentage of self-directed participant assets at approximately 37%, the same as Q4 2018. Equities remained the second-largest holding at 29%, followed by exchange-traded funds (17%), cash (13%) and fixed income (3%).
Allocation trends
The data also reveals specific sector holdings within each investment category:
- With regard to mutual funds, large-cap funds represented approximately 29% of all allocations, followed by taxable bond (20%), international (16%), hybrid (12%) and small-cap (12%) funds.
- Apple remained the top overall equity holding, representing 9.1% of the equity allocation of all portfolios. Amazon was the second-largest allocation, representing 6.4% of portfolios, and Berkshire Hathaway (2.5%), Microsoft (2.1%) and Facebook (1.8%) rounded out the top five equity holdings.
- Among exchange-traded funds, investors allocated the most dollars to U.S. equity (48%), international equity (16%), U.S. fixed income (15%), and sector ETFs (11%).
Report highlights additional findings
- On average, participants made just 6.5 trades during the quarter and held approximately 10 positions in their SDBA.
- Baby Boomers ended the quarter with the largest balance of all generations: $374,622, up from $342,810 in Q4 18. They were followed by Gen X ($202,481) and Millennials ($65,928).
- The average age of an SDBA participant was 51. Gen X made up 41% of participants, followed by Boomers (40%) and Millennials (12%).
The SDBA Indicators Report includes data collected from approximately 137,000 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 self-directed balance criteria.
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.
