Self-directed brokerage account balances with Charles Schwab enjoyed a brief period of recovery in July and August, but as the markets retracted in September, account balances tumbled for a third consecutive quarter amid high inflation, the threat of a recession, rising interest rates and ongoing geopolitical unrest, the company announced.
The average account balance across all participant accounts was $273,412 for the third quarter ending September 30, down 19.84% from last year and a 3.55% decrease from last quarter, according to the company’s SDBA indicators report.
Participant holdings were consistent with the previous quarter with equities being the most popular investment option, accounting for 33.4% of the assets in SBDAs; mutual funds accounted for 28.4% of the assets, followed by exchange-traded funds at 21%, and cash at 15%, Schwab said. Participant holdings also reflected an increase in fixed income, as in the previous quarter. Also consistent with the previous quarter and last year, participants on average held 13 positions in their accounts.
Information technology (28.76%) continued to be the largest equity sector holding, followed by Apple stock at 12.53%, Tesla (9.6%), Amazon (4.8%), Microsoft (3.2%) and Berkshire Hathaway held 1.95%. One newcomer to the top 10 holding this quarter is Costco Wholesale Co., at .93%, the report said.
The largest allocations to mutual funds were in large-cap stock funds (33.7%), followed by taxable bond (19.7%) and international (12.9%) funds. The most popular allocations for ETFs were U.S. equity, accounting for 51.7%, followed by fixed income with 14.1%, international equity with 12.7% and sector ETFs with 11.3%.
The report showed trading volumes were slightly lower at an average of 10.6 trades per account compared to 11.2 a year ago.
It also showed advised accounts held higher average account balances compared to non-advised accounts ($435,604 vs. $233,875).
More Gen Xers (50%) participated in SBDA accounts than any other generation. Baby boomers followed with 30% and millennials at 19%. Boomers had the highest balances with an average of $437,280, followed by Gen X with $246,206 and millennials had $83,408.
Charles Schwab's SDBA Indicators Report collected data from about 186,000 retirement plan participants with 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 company noted.