SAN FRANCISCO--(BUSINESS WIRE)--According to Charles Schwab’s SDBA Indicators Report, an industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts (SDBAs), the average account balance finished Q1 2020 at $252,675, down approximately 6% year-over-year and down 14% from Q4 2019.
SDBAs are brokerage accounts within retirement plans, including 401(k)s 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%).
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%).
- 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 Baby Boomers (37%) and Millennials (14%).
- Baby 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 Baby Boomers (41%) and Millennials (11%).
Schwab Stock Slices™ Now Available
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, just like regular stock trades at Schwab.
About the SDBA Indicators Report
The SDBA Indicators Report includes data collected from approximately 145,000 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.
The SDBA Indicators Report tracks a wide variety of investment activity and profile information on participants with a Schwab Personal Choice Retirement Account (PCRA), ranging from asset allocation trends and asset flow in various equity, exchange-traded fund and mutual fund categories, to age trends and trading activity. The SDBA Indicators Report provides insight into PCRA users’ perceptions of the markets and the investment decisions they make.
Data contained in this quarterly report is from the first quarter of 2020, and can be found here, along with prior reports.
About Charles Schwab
At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.
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Schwab Personal Choice Retirement Account® (PCRA) is offered through Charles Schwab & Co., Inc. (member SIPC), the registered broker/dealer, which also provides other brokerage and custody services to its customers.
All corporate names are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.
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