Mutual Funds Remain Top Holdings for All
September 27, 2018 — SAN FRANCISCO–(BUSINESS WIRE)–According to Charles Schwab’s SDBA Indicators ReportTM, an industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts (SDBAs), Millennials allocated a larger percentage of their portfolios to ETFs and cash than did other generations during the second quarter of 2018, while mutual funds remained the largest holding in the accounts of all generations.
SDBAs are brokerage accounts within retirement plans, including 401(k) and other types of retirement plans, which participants can use to invest in stocks, bonds, exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.
Baby Boomers made up approximately 42% of SDBA participants, followed by Gen X (40%) and Millennials (11%).
According to the Schwab data, mutual funds continued to hold the highest percentage of participant assets, with Baby Boomers allocating approximately 39 percent of their portfolios to them, followed by Gen X at 36 percent and Millennials at 32 percent. Equities were the second-largest allocation for all portfolios, with Gen X allocating approximately 30 percent of their portfolios to them, compared to Baby Boomers at 29 percent and Millennials at 27 percent.
Interestingly, Millennials allocated more to ETFs (23%) than did Gen X (19%) and Baby Boomers (16%) and also held more cash (16%) than other generations (Gen X and Boomers: 13% each). Baby Boomers held approximately 3 percent of their portfolios in fixed income, followed by Gen X (1%) and Millennials (0.5%).
The following chart shows the top ten equity holdings as a percentage of assets held in equities across all generations:
|MILLENIALS||GEN X||BABY BOOMERS|
|AMAZON.COM INC||7.60%||APPLE INC||9.61%||APPLE INC||8.65%|
|APPLE INC||5.73%||AMAZON.COM INC||6.93%||AMAZON.COM INC||5.00%|
|FACEBOOK INC||3.16%||FACEBOOK INC||2.91%||BERKSHIRE HATHAWAY||2.58%|
|TESLA INC||3.04%||NETFLIX INC||2.52%||FACEBOOK INC||2.00%|
|NETFLIX INC||2.81%||BERKSHIRE HATHAWAY||2.37%||MICROSOFT CORP||1.84%|
|BERKSHIRE HATHAWAY||1.81%||BANK OF AMERICA CORP||1.55%||NETFLIX INC||1.79%|
|ALIBABA GROUP HOLDING||1.50%||NVIDIA CORP||1.47%||NVIDIA CORP||1.38%|
|NVIDIA CORP||1.49%||ALIBABA GROUP HOLDING||1.45%||ALPHABET INC.||1.29%|
ALIBABA GROUP HOLDING
|1.12%||MICROSOFT CORP||1.33%||BANK OF AMERICA CORP||1.18%|
- U.S. broad funds were the most popular ETFs. All three generations held these three funds among their top five ETF holdings: Schwab U.S. Broad Market ETF, SPDR S&P 500 ETF and Vanguard Total Stock Fund;
- Additionally, all generations continued to hold Schwab S&P 500 Index FD as their top mutual fund holding, followed by Schwab Total Stock Market Index.
- The average SDBA balance for all participants in the second quarter of 2018 was $265,902, up 1.5 percent from the previous quarter and 23 percent from the second quarter of 2017;
- Baby Boomers had the highest balances at an average of $365,561, followed by Gen X at $194,534, and Millennials at $61,916;
- Of participants using an advisor to manage their PCRA, 46% were Boomers, 42% were Gen Xers and 8% were Millennials;
- On average, Baby Boomers held more positions in their SDBA than other generations (11 vs. Gen Xers: 9, Millennials: 7);
- Mobile trades were equally popular among Millennials and Gen X, with 19 percent of each generation using that method, compared to 14 percent of Baby Boomers.
- PCRA users averaged 6.3 trades in the second quarter (Boomers: 6.9, Gen Xers: 6.2, Millennials: 5.9).
About the SDBA Indicators ReportTM
The SDBA Indicators Report includes data collected from approximately 137,000 retirement plan participants who currently have 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 SDBA Indicators Report tracks a wide variety of investment activity and profile information on participants with a Schwab Personal Choice Retirement Account (PCRA), ranging from asset allocation trends and asset flow in various equity, exchange-traded fund and mutual fund categories, to age trends and trading activity. The SDBA Indicators ReportTM provides insight into PCRA users’ perceptions of the markets and the investment decisions they make.
Data contained in this quarterly report is from the second quarter of 2018, and can be found at www.schwab.com/sdbaindicators, along with prior reports.
About Charles Schwab
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Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.
This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security.
Schwab Personal Choice Retirement Account® (PCRA) is offered through Charles Schwab & Co., Inc. (member SIPC), the registered broker/dealer, which also provides other brokerage and custody services to its customers.