Q3 SDBA Activity Down

November 15, 2004 (PLANSPONSOR.com) - Third quarter self-directed brokerage account (SDBA) activity remained static, with investors maintaining their exposure to equities, mutual funds, money markets and fixed income from July until September.

Mutual funds accounted for 48% of asset flows in the third quarter, according to Charles Schwab’s ‘SDBA Indicators’ report. This was up nearly 5% from the previous quarter. Equity asset flows were down 7% from the  second quarter , accounting for 32% of asset movement.

In a press release, Schwab analysts asserted that although trading was static, investors seemed to be getting less conservative in their investment choices, indicated by an increased investment in mutual funds and steady investments in money markets.

The number of trades per account fell in the third quarter, with the average account trading 2.42 times. This was down 1% from the second quarter. There was, however, a large differentiation between accounts over $250,000 and those under, with larger account trading much more (4.98 times) than their smaller counterparts (2.2 times). Large accounts were more active in equity trading in the third quarter, while smaller accounts tended to be driven by mutual fund trading, according to the news release.

Large accounts, not surprisingly, have on average more holdings (16.85) than their smaller counterparts (5.85). The average age of the holder is older, and their exposure to equities, mutual funds, and fixed-income vehicles are all larger as a percentage of their holdings when compared to smaller accounts. Smaller accounts tend to hold a larger percentage of their assets in cash and other equivalent holdings, according to Schwab. While the average SDBA balance was $95,146 in the third quarter, the average account size for all accounts valued over $250,000 was an impressive $565,742.

The SDBA report, released by Charles Schwab Corporate Services, profiles the investor behavior of the holders of the company’s self-directed brokerage accounts foe employer-sponsored retirement plans, the Schwab Personal Choice Retirement Account.