Self-Directed 401(k) Accounts Grow During Volatile Q2

Self-directed 401(k) account balances rose in the second quarter as market performance improved, according to Charles Schwab’s latest Self-Directed Brokerage Account Indicators Report.

The average account balance across participant accounts was $362,302 in Q2, up 7.9% from Q1, and 8.1% from a year ago.

SDBAs, available through workplace retirement plans such as 401(k)s, allow participants to invest beyond standard plan offerings in individual stocks, exchange-traded funds, mutual funds and other securities.

Though Q2 had continued market volatility from global trade concerns, mostly tied to President Donald Trump’s tariff policies, the stock market mostly performed well in the quarter. In Q2, the S&P 500 gained 10.9%, while the Russell 2000 index rose 8.5%.

Equities remained the dominant asset category, representing 34.8% of participant holdings. The information technology-led sector allocations, comprising 37.9% of equity investments, which are up from the previous quarter.

ETF holdings grew to 27.9% of total assets, surpassing mutual funds as the second-most popular investment vehicle. U.S. equity ETFs made up nearly half of ETF holdings, followed by U.S. fixed income ETFs at 13.0% and international equity ETFs at 11.9%.

Mutual funds accounted for 26.3% of participant assets, led by large-cap stock funds at 33.9%, money market funds at 17.9% and taxable bond funds at 14.3%.

Cash and equivalents represented 7.2% of assets, while fixed-income holdings made up 3.9%.

Trading volumes averaged 15.4 trades per account, consistent with the first quarter. Generation X participants represented the largest share of SDBA users at 46.9%, followed by Millennials at 27.0% and Baby Boomers at 22.8%. Baby Boomers maintained the highest average account balance at $599,314, with Gen X averaging $378,972 and Millennials $141,067.

Advised accounts significantly outperformed non-advised, averaging balances of $555,653 compared to $319,078. Investors with advised accounts also held nearly twice as many positions and exhibited more diversified allocations. Gen X investors held the highest share of advised accounts at 52.4%, followed by Millennials at 25.0% and Baby Boomers at 20.7%.

Across all participants, the average number of holdings per account remained steady at 11.8, reflecting a stable approach to diversification over the past year.

Schwab’s quarterly report includes data collected from approximately 315,000 retirement plan participants who currently have balances between $5,000 and $10 million in a Schwab Personal Choice Retirement Account. The data is extracted quarterly on all accounts that are open as of quarter-end and meet the balance criteria.