Schwab Report: Self-Directed 401(k) Investor Balances Rebound in Q1 Following Strong Market Performance

SAN FRANCISCO–(BUSINESS WIRE)–According to Charles Schwab’s SDBA
Indicators Report™, an industry-leading benchmark on retirement plan
participant investment activity within self-directed brokerage accounts
(SDBAs), the average SDBA balance jumped to $267,609 at the end of Q1
2019, an increase of 8.7 percent from Q4 2018, as the markets bounced
back from the sharp losses experienced at the end of 2018.

SDBAs are brokerage accounts within retirement plans, including 401(k)s
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.

According to the Schwab data, mutual funds continued to hold the highest
percentage of participant assets at approximately 37 percent, the same
as Q4 2018. Equities remained the second-largest holding at 29 percent,
followed by exchange-traded funds (17%), cash (13%) and fixed income
(3%).

Allocation Trends

The data also reveals specific sector holdings within each investment
category:

• With regard to mutual funds, large-cap funds represented approximately
  29 percent of all allocations, followed by taxable bond (20%),
  international (16%), hybrid (12%) and small-cap (12%) funds.
• Apple (AAPL) remained the top overall equity holding, representing 9.1
  percent of the equity allocation of all portfolios. Amazon (AMZN) was
  the second-largest allocation, representing 6.4 percent of portfolios,
  and Berkshire Hathaway (BRKA) (2.5%), Microsoft (MSFT) (2.1%) and
  Facebook (FB) (1.8%) rounded out the top five equity holdings.
• Among exchange-traded funds, investors allocated the most dollars to
  U.S. equity (48%), international equity (16%), U.S. fixed income
  (15%), and sector ETFs (11%).

Report Highlights

Additional findings include:

• On average, participants made just 6.5 trades during the quarter and
  held approximately 10 positions in their SDBA.
• Baby Boomers ended the quarter with the largest balance of all
  generations: $374,622, up from $342,810 in Q4 18. They were followed
  by Gen X ($202,481) and Millennials ($65,928).
• The average age of an SDBA participant was 51. Gen X made up 41
  percent of participants, followed by Baby Boomers (40%) and
  Millennials (12%).

About the SDBA Indicators Report™

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
Report™ provides insight into PCRA users’ perceptions of the markets and
the investment decisions they make.

Data contained in this quarterly report is from the first quarter of
2019, and can be found at www.schwab.com/sdbaindicators,
along with prior reports.

About Charles Schwab

At Charles Schwab, we believe in the power of investing to help
individuals create a better tomorrow. We have a history of challenging
the status quo in our industry, innovating in ways that benefit
investors and the advisors and employers who serve them, and championing
our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com.
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Disclosures

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.

© 2019 Charles Schwab & Co., Inc. Member SIPC.
(0519-9T8S)

Contacts

Mike Peterson
Charles Schwab
330-908-4334
mike.peterson@schwab.com

Mike Gelormino
Intermarket Communications
212-754-5479
mgelormino@intermarket.com