SDBA Balances Increase in 2021

Most participant assets were held in equities, followed by mutual funds.

According to Charles Schwab’s “SDBA Indicators Report,” a benchmark on retirement plan participant investment activity within self-directed brokerage accounts (SDBAs), the average account balance across all participant SDBAs finished the second quarter of 2021 at $348,183, a nearly 22% increase year-over-year and a 4.3% increase from the first quarter of the year.

The second quarter “SDBA Indicators Report” also showed that trading volumes were in line with a year ago, at an average of 14 trades per account, as it says participants encountered familiar COVID-19 volatility with the rise of the Delta variant. Despite some fears, Charles Schwab said participants saw account growth year-over-year as stocks continued to climb off the March 2020 low and consumer confidence surged back to pre-pandemic levels.

The largest amount of participant assets were held in equities, at 37%. Mutual funds were the second largest holding at 30%, followed by exchange-traded funds (ETFs) (20%), cash (12%) and fixed income (1%).

The data also breaks down specific asset class and sector holdings within each investment category. Large-cap funds had the largest allocation, at approximately 34% of all mutual fund allocations, followed by taxable bonds (19%) and international funds (16%).

The largest equity sector holding was information technology (IT) at 29%. Apple was the top overall equity holding, comprising 10.26% of the equity allocation of portfolios. The other equity holdings in the top five were Tesla (6.28%), Amazon (5.03%), Microsoft (2.72%) and NVIDIA (1.84%).

Among ETFs, investors allocated the most money to U.S. equity (50%), followed by sector ETFs (15%), international equity (13%) and U.S. fixed income (13%).

The report also said advised accounts held higher average account balances compared with non-advised accounts at $550,127 versus $302,330.

Among generations, Generation X had the most advised accounts at 48%, followed by Baby Boomers (36%) and Millennials (13%). Gen X made up approximately 45% of SDBA participants, followed by Baby Boomers (32%) and Millennials (18%). Baby Boomers had the highest SDBA balances at an average of $532,338, followed by Gen X at $306,489 and Millennials at $103,777. All balances were up from Q1 2021.

Lastly, on average, participants held 12.3 positions in their SDBAs at the end of Q2 2021, up slightly from 10.5 last year and consistent with Q1 2021.