Self-Directed Brokerage Accounts Fell 10.6% in Value in 4Q18

Account values fell sharply from the previous quarter and were 6.3% lower than the previous year, according to Charles Schwab’s SDBA Indicators Report.

The market volatility that occurred in the fourth quarter of 2018 weighed heavily on retirement plan participants’ self-directed brokerage accounts (SDBAs), with the average balance falling by 10.6% from the previous quarter to $246,153. Year-over-year, balances were down 6.3%.

At 37%, mutual funds held the highest percentage of participant asset, on par with the fourth quarter of 2017. This was followed by equities (28%), exchange-traded funds (17%), cash (15%) and fixed income (3%). Despite the high market volatility in the fourth quarter of 2018, participants averaged a mere 2.2 trades for the month.

Among mutual funds, participants’ largest allocation was to large-cap funds (28%), followed by taxable bond funds (21%), international funds (16%), hybrid funds (12%) and small-cap funds (12%).

Among mutual funds with equity exposure, Apple was the top holding (9%), followed by Amazon (6.5%), Berkshire Hathaway (3%), Microsoft (2%) and Facebook (1.75%).

Among exchange-traded funds, investors allocated the most dollars to U.S. equity (48%), international equity (16%) and U.S. fixed income (15%).

Schwab also found that, on average, participants held approximately 10 positions in the SDBA. Baby Boomers and Gen X made up approximately 41% of SDBA participants each, followed by Millennials (12%).

The average age of a SDBA participant was 51. Seventy-six percent of SDBA participants were male, and 24% female.

The SDBA Indicators Report is based on data from 137,000 retirement plan participants who have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account.