Close Close
ThinkAdvisor

Retirement Planning > Saving for Retirement > 401(k) Plans

Self-Directed 401(k) Balances Held Steady in Q3: Schwab

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Large-cap funds accounted for about 34% of mutual fund allocations, followed by 19% to taxable bond funds and 15% to international funds.
  • Information technology was again the largest equity sector, at 29.8%, up slightly from 29.3% last quarter.
  • Advised accounts held higher average balances in the third quarter than nonadvised accounts: $542,365 vs. $294,215.

Retirement plan participant account balances in self-directed brokerage accounts averaged $341,068 in the third quarter, a 12.8% increase year over year and a 2% decrease from the second quarter, Charles Schwab reported Monday.

SDBA account holders can use their brokerage accounts to invest retirement savings in individual stocks and bonds, ETFs, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.

The report said third-quarter trading volumes were similar to trades from one year ago and slightly lower than last quarter: an average of 13.1 trades per account, compared with 13.8 trades in the April-to-June period.

Participant holdings also remained similar to last quarter’s, with a slight increase in cash holdings. Thirty-six percent of participant assets were held in equities, 30% in mutual funds, 20% in ETFs, 13% in cash and 1% in fixed income.

Allocation Trends

Schwab’s third-quarter data showed that large-cap funds accounted for about 34% of mutual fund allocations, followed by 19% to taxable bond funds and 15% to international funds.

Information technology was again the largest equity sector holding at 29.8%, up slightly from 29.3% last quarter. The top five equity holdings remained the same as last quarter: 

  • Apple: 10.6%. 
  • Tesla: 6.9%.
  • Amazon: 4.9%.
  • Microsoft: 2.9%.
  • NVIDIA: 2%.

Among ETFs, investors allocated 50% to U.S. equity in the third quarter, 14% to sector ETFs, 14% to U.S. fixed income and 13% to international equity.

More on this topic

Schwab based its report on data collected from some 176,000 retirement plan participants who have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account

Other Report Highlights

Advised accounts held higher average account balances in the third quarter than nonadvised accounts: $542,365 vs. $294,215.

Forty-nine percent of Generation Xers had advised accounts, compared with 35% of baby boomers and 14% of millennials.

Gen X accounted for about 45% of SDBA participants, followed by boomers at 31% and millennials at 18%.

The report said boomers had the highest SDBA balances at an average of $526,193, Gen Xers $301,686 and millennials $101,670.

On average, participants held 12.4 positions in their SDBAs at the end of the third quarter, consistent with the previous quarter.