Most SDBA Participants Invest in Mutual Funds

Retirement plan participants in advised SDBAs displayed a more diversified asset allocation mix and had a lower concentration of assets in particular securities than those in non-advised accounts.

Mutual funds continued to hold the highest percentage of participant assets in self-directed brokerage accounts (SDBAs) with approximately 38%, an increase of 1% from last year, according to Charles Schwab’s SDBA Indicators Report.

The report is based on data from participants in the Schwab Personal Choice Retirement Account (PCRA), which showed the average account balance was up 23.4% to $261,900 from $212,178 a year ago and slightly down by .3% from last quarter.  Trading volumes were up 21% from last quarter to 7.8 average trades per quarter from 6.4. Despite the high market volatility experienced in the first quarter, participants averaged just 2.6 trades per month.

Allocations to equities remained the same at 29%, and exchange-traded funds (17%), cash (14%), and fixed income (2%) rounded out participants’ portfolios.

Baby Boomers made up approximately 42% of SDBA participants, followed by Gen X (40%) and Millennials (11%). Millennials had the lowest PCRA balance at $59,548, while the average for Gen X was $188,176 and for Baby Boomers was $359,568, very similar to last quarter. All three generations had very similar equity holdings, with Apple, Amazon, Facebook and Berkshire Hathaway coming in at the top. Millennials also had Tesla and Netflix stocks as their top holdings, while Gen X and Boomers held the more conservative Bank of America.

As for the top exchange-traded fund (ETF) holdings, they were very similar across generations: Schwab US Broad Market ETF, SPDR S&P 500 ETF, Vanguard and Schwab International Equity were at the top for all. As opposed to last quarter, the Bitcoin ETF fell out of the Top 10 ETF holdings for Millenials.

All held Schwab S&P 500 Index FD as their top mutual fund holding, followed by Schwab Total Stock Market Index.

The Roth PCRA account holder balance was much lower than the non-Roth PCRA: $63,885 vs. $265,195. Gen X had the most Roth accounts as a percentage of accounts in their respective generations, while Baby Boomers were highest in the non-Roth accounts.

Schwab’s analysis found 18.7% of SDBA accounts were managed by an independent investment adviser. The average balance of advised accounts was $434,513. Those participants who used advisers displayed a more diversified asset allocation mix and had a lower concentration of assets in particular securities. As for ETF holdings, advised participants again had more balance among all the holdings, not having more than 3% of any one ETF.