Despite market turbulence, participants within self-directed brokerage accounts (SDBAs) did not make significant changes to their investments over the course of the first quarter.
According to Charles Schwab’s latest SDBA Indicators Report on plan participant investment activity within SDBAs, the average account balance across all participant accounts finished the first quarter, 2022 at $332,017, which was a 0.51% decrease year-over-year and a 6.25% decrease from the fourth quarter of 2021.
The first quarter SDBA indicators align with the performance of volatile equity and bond markets where the combination of a pivoting Federal Reserve and conflict in Ukraine drove volatility up and equity prices down globally, the report notes. Still, participants did not make significant changes to their investments during this period.
Trading volumes decreased significantly from a year ago, down to 13.7 trades from 19.6 in the first quarter of 2021 but were up only slightly from the fourth quarter of 2021 (13.3). On average, participants held 12.5 positions in their SDBAs at the end of the first quarter, consistent with the prior quarter and up slightly from 12.2 at the end of the first quarter of 2021.
Participant holdings also remained similar to the previous quarter, with a slight increase in cash. Individual equities held the majority of participant assets (36%), while mutual funds were the second largest holding at 29%, followed by ETFs (21%), cash (13%) and fixed income (1%).
Allocation Trends
Schwab’s report also shows the specific asset class and sector holdings within each investment category. Overall, allocations were very similar to the prior quarter:
Mutual funds: Large-cap stock funds had the largest allocation at approximately 35.4% of all mutual fund allocations. They were followed by taxable bond (18.7%) and international (14.5%) funds.
Equities: The largest equity sector holding was information technology at 30.5%, down slightly from 31.8% the prior quarter and up from 28.5% in the first quarter of last year. The top five equity holdings remained the same as the prior quarter. Apple was the largest individual stock holding (12%), followed by Tesla (9.4%), Amazon (4.7%), Microsoft (3.2%) and NVIDIA (2.7%).
ETFs: Among ETFs, investors continued to allocate the most dollars to U.S. equity (51.3%), followed by sector ETFs (13.2%), U.S. fixed income (12.6%) and international equity (12.4%).
Other Highlights
Additional findings show that advised accounts held higher average account balances compared to non-advised accounts—even though both were down for the quarter.
The average participant balance for advised accounts was down to $525,254 from $558,470 last quarter, while non-advised accounts were down to $286,008 from $304,164.
Gen X had the most advised accounts at 49.6%, followed by Baby Boomers (32.5%) and Millennials (14.9%). Gen X also made up 45.5% of SDBA participants, followed by Baby Boomers (30%) and Millennials (18.9%). Those with advised accounts had higher average trades, totaling 19.7 versus 12.3 for non-advised accounts.
Not surprisingly, Baby Boomers had the highest SDBA balances at an average of $520,616, followed by Gen X at $299,520 and Millennials at $102,113.
The SDBA Indicators Report includes data collected from approximately 181,000 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.
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