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The vast majority of Vanguard's retail and defined contribution clients are staying the course during record market volatility. Self-directed retail investors were the most active traders, but even among that cohort, more than 90 percent of account holders have not traded at all.
Across account types, 8 percent of Vanguard retail or workplace plan clients made a trade between February 19, when equity markets hit record highs, and March 20.
While individuals were mostly stoic, the four-week period saw elevated trading relative to average times. Of the 22 trading days since market highs, 16 were among the highest in trading volume since Vanguard began tracking activity in 2011.
On an average day, about 0.4 percent of Vanguard clients make a trade. On March 12, 1.7 percent made at least one trade.
Perhaps surprisingly, the majority were moving money into equities—about seven out of 10 trades flowed to equities.
Meantime, flows to fixed income have been positive, which Vanguard says indicates that wealthier households are moving away from equities and selling into market declines, while more typical households are buying equities on market dips.
|DC participants have lowest level of trading
Participants in Vanguard defined contribution plans have lower trading volumes than self-directed retail clients.
On its peak day, about 0.2 percent of DC-only clients made a trade. For the 22 trading-day period, 2.5 percent of DC-only clients made a trade. Six percent of affluent retail clients that hold an IRA and a taxable account made trades on the peak day. And for the period, about a quarter of that group made trades.
Half of households that made a trade during the period only made one. About 6 percent made four trades, and 7.5 percent made between six and nine trades.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
