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Schwab's April Net New Assets Slump, Client Assets Rise

The Charles Schwab Corporation SCHW released its monthly activity report for Apr 2016. The company recorded net new assets (brought by existing as well as new clients) of $1.3 billion, down 86% from the comparable period a year ago and 90% from the preceding month. The plunge was largely due to client cash disbursements during the tax season.

Total client assets were $2.58 trillion, up 1% year over year and 1% sequentially. Additionally, client assets receiving ongoing advisory services totaled $1.29 trillion for the month, up 2% year over year and 1% from the prior month.

At the end of Apr 2016, Schwab’s average interest-earning assets amounted to $183.3 billion, up 20% from Apr 2015 and 1% from Mar 2016.

Schwab opened 103,000 new brokerage accounts in Apr 2016. This is 7% lower than the Apr 2015 level but 5% higher than the Mar 2016 level. Further, the company’s active brokerage accounts totaled 9.9 million. The reported figure increased 4% from the prior-year comparable period but was almost on par with the previous month.

Clients’ banking accounts totaled 1.05 million, up 6% year over year and 1% from the preceding month. Also, Schwab reported 1.5 million corporate retirement plan participants for Apr 2016, up 4% year over year and almost flat compared with last month.

Net sell activity in Mutual Fund for Apr 2016 was $207 million compared with net buy activity of $420 million in Apr 2015 and net buy activity of $1,769 million in Mar 2016. Net buy activity in Exchange Traded Funds was $1,994 million as against $2,993 million in Apr 2015 and $2,336 million in Mar 2016.

Schwab remains well positioned to benefit from the anticipated gradual rise in interest rates and improved client confidence as well as diversified revenue streams, enhanced equity markets and management’s efforts to boost the client base in advisory solutions. However, the company’s elevated expenses, sensitivity to interest rates and significant dependence on fee-based revenue streams continue to be matters of concern.

Currently, Schwab carries a Zacks Rank #3 (Hold).

Among other investment brokers, TD Ameritrade Holding Corporation AMTD reported average client trades of 470,000 per day in its activity report for Apr 2016. This marks a 3% rise from the prior-year period and 2% from the previous month. As of Apr 30, 2016, TD Ameritrade reported $719 billion in total client assets, up 2% from the prior-year period and 1% from the preceding month.

Interactive Brokers Group, Inc.’s IBKR Electronic Brokerage segment reported total client Daily Average Revenue Trades (DARTs) of 662,000 for Apr 2016, up 5% from Apr 2015 and 1% from Mar 2016. Further, total customer accounts were 348,700, up 15% from the year-ago period and 1% from the preceding month.

E*TRADE Financial Corporation ETFC reported DARTs of 159,215 for Apr 2016, up 1% year over year and 1% sequentially.

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