Retirement investors who invest some 401(k) retirement assets through a self-directed Charles Schwab brokerage account saw their average account balances drop 3.55% in the third quarter of 2022, that ended September 30, compared to Q2 2022, and balances are down 19.84% year-over-year, new data shows.
The average account balance across all participant accounts finished at $273,412 for Q3, the Charles Schwab SDBA Indicators Q3 2022 Report found. That is lower than the $283,485 average value at the end of Q2 2022 and far lower than the average balance of $341,068 for 2021.
“Stocks rallied early but retracted their gains to close out a third consecutive quarter of negative returns; from its August 16 high to September 30, the S&P 500 Index declined nearly 17%,” the report’s asset balance summary stated.
SDBAs are brokerage accounts within retirement plans, including 401(k)s and other types of retirement plans, that participants can use to invest retirement savings in individual stocks and bonds, as well as exchange-traded funds, mutual funds and other securities that are not part of their retirement plan’s core investment offerings.
Markets retracted for a third consecutive quarter “amid high inflation, increasing interest rates, rising recession risks, and ongoing geopolitical unrest,” a Schwab press release stated.
Equities remained the largest holding for participants in Q3 2022, at 33.43% of assets, with mutual funds at 28.4% and exchange-traded funds at 20.96%, the report found. Cash and equivalents comprised 14.74%, with fixed Income just 2.51%, data showed.
“Overall, participant holdings remained similar to last quarter, with an increase in fixed income,” stated the report asset balance summary.
The largest equity sector holding was information technology at 28.8%, the report found. The top equity holdings remained Apple at 12.5%, Tesla 9.6%, Amazon 4.8% and Microsoft 3.2%.
Investors allocated the largest portions of fund flows to large-cap stock funds at 33.7%, followed by 19.7% for taxable bond funds and international funds at 12.9%, according to Schwab.
Additional report findings:
The SDBA Indicators Report includes data collected from approximately 186,000 retirement plan participants who currently have balances between $5,000 and $10 million. Data is extracted quarterly on all accounts that are open as of quarter-end and meet the balance criteria.
