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Portfolio > Mutual Funds > Equity Funds

Self-Directed Investors Finished 2019 on a High Note: Schwab

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The average retirement plan participant account size within self-directed brokerage accounts was $294,105 at the end of 2019, a 19% year-over-year increase and up 6% from the third quarter, Charles Schwab reported Wednesday.

Participants’ asset allocation finished the year just about where it started. Mutual funds held 37% of participant assets, equities 29%, ETFs 19%, cash 12% and fixed income 3%.

Fourth-quarter trading volumes were slightly higher than in the third quarter at an average of 7.2 trades per account, up from 6.7 trades in the earlier quarter.

According to the report participants averaged approximately 10 positions in their SDBAs at the end of the fourth quarter, the same both year over year and quarter over quarter.

A Schwab spokesman on Wednesday said no results of SDBA participants’ trading activity during the current market turmoil were available. The first-quarter report will be published in late April or early May.

Gen X comprised about 42% of SDBA participants, baby boomers 38% and millennials 13%. Seventy-six percent of participants were men and 24% women. The average age of an SDBA participant was 51.

SDBAs are brokerage accounts within retirement plans — including 401(k)s and other types of retirement plans — that participants can use to invest in stocks, bonds, exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.

The quarterly SDBA report includes data collected from some 142,000 retirement plan participants with current balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account.

Allocation Trends

According to fourth-quarter data, large-cap mutual funds represented approximately 30% of all mutual fund allocations, followed by taxable-bond funds at 20% and international funds at 16%.

Information technology dominated equity sector allocation, representing 27% of holdings. Apple maintained its position as top dog, with a 9.5% quarter-over-quarter increase of the equity allocation of portfolios to 11%.

The other equity holdings in the top five:

  • Amazon – 5.5%
  • Microsoft – 2.6%
  • Berkshire Hathaway – 2.4%
  • Facebook – 1.6%

ETFs experienced the largest net asset flows in the fourth quarter, with investors allocating the most dollars to U.S. equity, 49.7%.

The top three holdings were the Vanguard Total Stock Market ETF and the SPDR S&P 500 ETF, both at 4.2%, and the Schwab US Broad Market ETF at 3.4%.

U.S. fixed income, international equity and sector ETFs rounded out the allocations in the ETF category at 15.2%, 14.7% and 10.5%.

— Check out Warren Buffett’s Top 10 Holdings in Financial Services on ThinkAdvisor.


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