Trader Talk

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York, on Monday, Aug. 23, 2021.
Michael Nagle | Bloomberg | Getty Images

It’s good to be in an up market.

A new Schwab report on self-directed brokerage accounts within 401(k) plans indicate that active traders have done well in the past year.

The average account balance in the Schwab Personal Choice Retirement Account at the June was up by 22%, to $348,183 from $285,616 a year ago.

The report includes data collected from approximately 174,000 retirement plan participants with balances between $5,000 and $10 million.

While brokerage accounts are normally associated with active traders, the average Schwab trader isn’t exactly a rabid day trader. The average account made 13.8 trades in Q2, about one trade a week, down from 19.6 in the first quarter.

Traders didn’t have a huge portfolio, either. The average account held just 12.3 positions.

They’re spreading out their investments as well. Some held stocks directly, but half also held mutual funds and ETFs, and a  high percentage of the money was held in cash, possibly because money is being direct deposited and waiting to be allocated.

 Where was the money invested?

  • Equities:                37%
  • Mutual funds:         30%
  • ETFs:                     20%
  • Cash/equivalents:  12%
  • Fixed income:        1%

 Not surprisingly, traders loved big-cap tech stocks, but surprisingly electric vehicle maker NIO showed up on the top list for equity holdings, along with Tesla.

Most popular stocks (% of equity assets)

  • Apple      10.2%
  • Tesla       6.2%
  • Amazon  5.0%
  • Microsoft  2.7%
  • NVIDIA     1.8%
  • Nio              1.0%

Brokerage accounts may be associated with trading, but these traders held very conservative investments when it came to ETF holdings, preferring passively managed index funds.

Top Five ETF Holdings

  • Vanguard Total Stock Market  4.3%
  • SPDR S&P 500                      4.1%
  • Invesco QQQ Trust                  3.8%
  • Vanguard S&P 500                 3.1%
  • Schwab US Broad Market        2.5%

 Who had the most money?

  • Baby Boomers (57 +)    $532,338
  • Gen X  (41-56)              $306,489
  • Millennials (29-40)         $103,777

 It’s good to be Schwab.

 While much of the media’s attention has been focused on Robinhood, which has amassed an impressive 22 million accounts in a relatively short period of time, the real money is elsewhere.

Charles Schwab and Vanguard both have more than 30 million accounts each, but the difference is in the assets under management. 

Schwab and Vanguard both have over $7 trillion in assets, Robinhood a little over $80 billion.

That’s a huge difference.  Taken together, Schwab and Vanguard have nearly 200 times the assets of Robinhood.