According to Charles Schwab’s SDBA Indicators Report, the average account balance across all participant accounts finished 2021 at $352,764, a 6.4% increase year-over-year and a 3.4% increase from the third quarter.
The fourth quarter 2021 SDBA Indicators Report reflects continued resilience among investors through a historically volatile year, Schwab notes. “November began with fears over new COVID variants, inflation, and Fed asset tapering, but balances ultimately ended the quarter higher as investor concerns subsided and the economy proved stable overall,” the report states.
Participant holdings remained similar to the fourth quarter of 2020, with a slight decrease in cash holdings and slight increases in equities and ETFs. Most participant assets were held in equities—37% in 2021 versus 35% in 2020. Mutual funds were the second largest holding at 30% versus 31% in 2020, followed by ETFs (21% versus 18% in 2020), cash (11% versus 14% in 2020) and fixed income (1% versus 2% in 2020).
Schwab’s data also reveals specific asset class and sector holdings within each investment category:
- Mutual funds: Large-cap funds had the largest allocation at approximately 35.1% of all mutual fund allocations, higher than last year (31.9%). They were followed by taxable bond (18.5%) and international (14.9%) funds.
- Equities: The largest equity sector holding was information technology at 31.8%, up slightly from 29.8% last quarter and similar to last year. The top five equity holdings remained the same as last quarter. Apple was the top overall equity holding, comprising 11.9% of the equity allocation of portfolios, followed by Tesla (8.5%), Amazon (4.5%), Microsoft (3.2%) and NVIDIA (2.7%).
- ETFs: Among ETFs, investors continued to allocate the most dollars to U.S. equity (51.5%), followed by sector ETFs (13.4%), U.S. fixed income (12.8%) and international equity (12.4%). Year over year, investors increased U.S. equity allocations by 2.3 percentage points and decreased fixed income allocations by 2.2 percentage points.
- Advised accounts held higher average account balances compared to nonadvised accounts, at $558,470 versus $304,164.
- Gen Xers had the most advised accounts at 48.9%, followed by Baby Boomers (33.7%) and Millennials (14.5%).
- Participants who used advisors displayed a more diversified asset allocation mix and had a lower concentration of assets in particular securities.
- Gen Xers made up approximately 45.2% of SDBA participants, followed by Baby Boomers (30.7%) and Millennials (18.5%).
- Baby Boomers had the highest SDBA balances at an average of $548,658, followed by Gen Xers at $315,574 and Millennials at $106,408.
- Quarterly trading volumes were slightly lower than one year ago, down to 13.3 trades from 13.9, and similar to last quarter (13.1).
- On average, participants held 12.5 positions in their SDBAs at the end of 2021, consistent with the third quarter of 2021 and higher than the fourth quarter of 2020 (11.4).
- Millennials and Gen Xers had higher percentage of mobile trades at 37% and 29.5%, with Baby Boomers at 23%.
The findings are based on data collected quarterly from approximately 178,000 retirement plan participants who currently have balances between $5,000 and $10 million in their Schwab Personal Choice Retirement Accounts.
About the Author:
Ted Godbout is a strategic communications and government relations professional, with extensive experience working on employee benefit, federal tax, financial services, health care and retirement security issues. See linkedin.com/in/ted-godbout-26802949
Republished from The National Association of Plan Advisors (www.napa-net.org) on 3/2/22. The Pacific Financial Group periodically welcomes guest contributions. The views presented here do not necessarily represent those of The Pacific Financial Group.
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