Charles Schwab reported this week that retirement plan participant account balances within its self-directed brokerage accounts averaged $252,675 at the end of the first quarter.

This was down 5.9% year over year, and down by 14.1% from the fourth quarter.

First-quarter trading volumes nearly doubled, which was in line with broader investor activity as coronavirus-spurred market volatility sent major stock indexes plunging, Schwab said. SBDA participants averaged 13 trades per account, up from seven in the previous quarter.

Asset allocations were on a par with last quarter, with cash holdings being the only exception. Mutual funds held 34% of participant assets, equities 27%, cash 19% (up from 12% in the fourth quarter), ETFs 17% and fixed income 3%.

On average, participants held 10 positions in their SDBA accounts at the end of the first quarter, similar both to last year and last quarter.

Schwab's quarterly SDBA report includes data collected from some 145,000 retirement plan participants with current balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Account.

SBDA participants can use their brokerage accounts to invest retirement savings in stocks, bonds, exchange-traded funds, mutual funds and other securities that are not part of their retirement plan's core investment offerings.

Gen X made up 42.6% of SDBA participants in the first quarter, baby boomers 37.2% and millennials 13.9%.

Boomers had the highest SDBA balances at an average of $367,425, followed by Gen X at $199,071 and millennials at $65,207.

Forty-five percent of Gen X accounts were advised, followed by 41% of boomer accounts and 11% of millennial ones.

Allocation trends

According to data Schwab collected in the first quarter, large-cap funds had the largest allocation at 29.8% of all mutual fund allocations, followed by taxable bond funds at 21.9% and international funds at 14.4%.

Overall, the market value allocations was little changed from last quarter and last year.

Information technology maintained its grip on equity sector holdings at 29%, up from 27% last quarter. These were the top five equity holdings:

Apple – 10.9%
Amazon – 6.5%
Microsoft – 3.6%
Berkshire Hathaway – 2.5%
Tesla – 2.1%

Investors allocated 48% of their ETF holdings to U.S. equity.

The SPDR S&P 500 ETF was the top holding at 5%, followed by the Vanguard Total Stock Market ETF at 4% and the Invesco QQQ Trust at 3.4%.

U.S. fixed income, international equity and sector ETFs completed the allocations at 18%, 13% and 10%.

Fractional shares

Along with its first quarter SBDA report, Schwab also announced that its new Schwab Stock Slices service is now available in its brokerage accounts, including Personal Choice Retirement Accounts.

This service enables investors to own fractional shares in S&P 500 companies for as little as $5 each.

Investors can use the new service to buy a single stock slice or up to 10 at once. In addition, they can hold slices of as many S&P 500 companies as they wish through multiple purchases.

Schwab Stock Slices are purchased commission-free online.

Instant Insights /

Self-directed 401(k) balances down 14% in Q1: Schwab

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