Schwab’s new assets rose last month, but trading and total assets fell

Clients funneled $12.1 billion of new assets to Charles Schwab Corp. in January, up 32% from December, but trading activity from both its retail and advisory channels fell, as did total client assets. The data, disclosed in the San Francisco-based brokerage firm’s monthly activity report on Friday, validates forecasts from Schwab and rivals such as TD Ameritrade Holding Corp. of Omaha, Neb., that trading revenue and corollary metrics such as margin balances are likely to decline through much of 2009. Client assets at Schwab totaled $1.10 trillion at the end of January, down 21% from 12 months earlier and 3% from the end of December as broad market indexes and interest rates continued their slump. Schwab said clients lost $45.4 billion due to market declines, an amount that the company failed to offset with its $12.1 billion of net new assets. Trades from commission-paying customers in January fell 9% from December and 10% from January 2008 to an average of 278,800 a day, while daily trades from fee-based investment advisers were off 27% and 26%, respectively, to 23,600. That’s the lowest level of trading since August for both channels. Daily average share volume on the New York Stock Exchange and the Nasdaq Stock Market Inc., however, rose in January from December. The three main market indexes continued to plummet in January — with the Dow Jones Industrial Average off 9%, the Nasdaq Composite Index down 6% and the Standard & Poor’s 500 stock indexes down 9%. The indexes are down 37% to 40% since the end of January 2008. In one mildly upbeat sign, Schwab clients shifted money to long-term mutual funds from money-market funds in January. Most notably, they poured $2.3 billion into taxable bond funds and withdrew $459.4 million from money funds offered by the company. The move represented the first net flows out of money-market funds since June and the largest inflow into taxable bond funds in more than a year. The second biggest magnet for new investments was international stock funds, which attracted $586.3 million from Schwab clients. Schwab earlier said it would waive fees on some of its largest money-market funds to avoid negative returns for clients.