Schwab Report: Year-End 2020 Self-Directed 401(k) Balances Up 13% Year-Over-Year Despite Ongoing Volatility and Q1 Market Lows
March 02 2021 - 9:00AM
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 across all participant
accounts finished Q4 2020 at $331,664, a 13% increase
year-over-year and a 10% increase from Q3 2020.
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 individual stocks and bonds, as
well as exchange-traded funds, mutual funds and other securities
that are not part of their retirement plan's core investment
offerings.
The SDBA Indicators Report also revealed that participants
remained resilient in the face of volatility and early 2020 market
lows driven by the COVID-19 pandemic. Average account balances
finished the year up 31% compared to the lows they experienced at
the end of Q1 2020.
The majority of participant assets continue to be held in
equities (35%), up from Q4 2019 at 29%. Mutual funds were the
second largest holding at 31%, followed by ETFs (18%), cash (14%),
and fixed income (2%).
Allocation Trends
The data also reveals specific asset class and sector holdings
within each investment category:
- Mutual funds: Large-cap funds had
the largest allocation at 32% of all mutual fund allocations,
followed by taxable bond (20%) and international (16%) funds.
Overall, the allocation remained consistent throughout 2020.
- Equities: Information technology
remained the largest equity sector holding at 30%, down slightly
from 31% in Q3 2020. Apple continues to be the top overall equity
holding, comprising 12% of the equity allocation of portfolios. The
other equity holdings in the top five include Tesla (7%), Amazon
(6%), Microsoft (3%), and Berkshire Hathaway (1%).
- ETFs: Among ETFs, investors
allocated the most dollars to U.S. equity (49%), followed by U.S.
fixed income (15%), sector ETFs (13%), and international equity
(12%).
Other Report Highlights
- Advised accounts hold higher average account balances compared
to non-advised accounts - $517,849 vs $288,513.
- On average, participants held 11.4 positions in their SDBAs at
the end of Q4 2020, slightly higher than the previous quarter
(10.8) and Q4 2019 (10.1). Baby Boomers held more positions in
their SDBA than other generations (12.8 vs. Gen X: 11.5,
Millennials: 8.8).
- Trading volumes were mostly unchanged from the previous
quarter, at an average of 13.9 trades per account in Q4 2020 up
slightly from 13.6 trades in Q3 2020. Participants made the most
trades in their equity holdings, followed by ETFs and mutual
funds.
- Gen X made up approximately 44% of SDBA participants, followed
by Baby Boomers (34%) and Millennials (16%).
- Gen X had the most advised accounts at 47%, followed by Baby
Boomers (38%) and Millennials (12%).
- Baby Boomers had the highest SDBA balances at an average of
$493,129, followed by Gen X at $282,494 and Millennials at
$94,872.
About the SDBA Indicators Report
The SDBA Indicators Report includes data collected from
approximately 161,000 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 fourth
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.
More information is available at www.aboutschwab.com. Follow us
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Investors in mutual funds and ETFs should consider carefully
information contained in the prospectus, including investment
objectives, risks, charges, and expenses. You can request a
prospectus by visiting Schwab.com or calling 800-435-4000. Please
read the prospectus carefully before investing.
Disclosures:
Brokerage Products: Not FDIC‐Insured • No Bank Guarantee •
May Lose Value
The securities shown are for informational purposes only and are
not a recommendation to transact in any security.
Through its operating subsidiaries, The Charles Schwab
Corporation (NYSE: SCHW) provides a full range of securities
brokerage, banking, money management and financial advisory
services to individual investors and independent investment
advisors. Its broker-dealer subsidiary, Charles Schwab & Co.,
Inc. (member SIPC, www.sipc.org), and affiliates offer a complete
range of investment services and products including an extensive
selection of mutual funds; financial planning and investment
advice; retirement plan and equity compensation plan services;
compliance and trade monitoring solutions; referrals to independent
fee-based investment advisors; and custodial, operational and
trading support for independent, fee-based investment advisors
through Schwab Advisor Services. Its banking subsidiary, Charles
Schwab Bank (member FDIC and an Equal Housing Lender), provides
banking and lending services and products. More information is
available at www.schwab.com and www.aboutschwab.com.
This report is for informational purposes only and is not a
solicitation, or a recommendation that any particular investor
should purchase or sell any particular security.
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.
(0221-1UNM)
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Mike Peterson Charles Schwab 330-908-4334
mike.peterson@schwab.com
Travis Fishstein The Neibart Group 718-801-8205
schwabrps@neibartgroup.com
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