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Schwab, TD Ameritrade Boost Assets on Weaker Trading in July

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Charles Schwab and TD Ameritrade have released their trading and asset figures for July with both firms showing higher net assets but lower average daily trading volume.

At San Francisco-based Schwab, net new assets entering the company from new and existing clients totaled $6.2 billion last month. Total client assets were $1.421 trillion as of July 31, up 11% from July 2009 and up 4% from June 2010.

Schwab had $5.5 billion in net new assets in June 2010 and $5.6 billion in July 2009. “July’s figure of $6.2 billion is relatively consistent with the prior month,” said spokesperson Greg Gable in a phone interview.

TD Ameritrade, based in Omaha, Nebraska, reported that it had roughly $340.1 billion in total client assets as of July 31, an increase of 21% from the same year-ago period and a jump of 5% from June 2010. (It does not release net new assets on a monthly basis.)

For the past three quarters, TD Ameritrade’s net new assets have topped the $27.9 billion in net new assets it reported for the full fiscal-year 2009, according to spokesperson Kim Hillyer. (The company does not release net new assets on a monthly basis.)

“We had record net new assets in fiscal 2009 and should do so again in fiscal 2010,” Hillyer said in a phone interview. “We continue to be very pleased with our asset gathering and where it is going.”

Schwab reported that its clients’ daily average trading volume was 365,300 in July 2010, down 1% from July 2009 and flat to June 2010, while TD Ameritrade’s average was 327,000 client trades per day, a drop of 12% from July 2009 and down 3% from June 2010.

Schwab’s Gable says trading levels in June and July are down from April and May, when average daily trading volume hit 440,000 and 512,000, respectively. While the lower levels are to be expected for summer months, “It shows there is still some investor activity, even a surprising amount,” he said.

Despite the weak markets and economy, Schwab is upbeat given the flow of net new assets and higher client assets. “The market environment has impacted people’s ability and willingness to invest,” Gable said. “This is consistent with what we expect, though there’s still a significant amount of money [coming in].”

TD Ameritrade’s Hillyer agrees. “We expected the 327,000 trading figure based on figures we reported as part of our recent quarterly earnings. This is what is known as the summer slowdown, and it’s indicative of what we are seeing now from the clients in terms of their trading activity,” she said.

For the past nine months, TD Ameritrade clients’ average daily trading volume has been about 390,000.

“We do lots of client-sentiment surveys and are not seeing a flight to cash by any stretch of the imagination,” explained Hillyer, “though there is less trading.”

According to a recent TD Ameritrade survey, about 40% of clients want to see an upswing in the economy before becoming more active in the markets, she says.

In a separate study released by the company on Tuesday, August 17, more than 36% of today’s teens said they would consider delaying or not going to college due to the expense it requires.

In addition, the survey found that 41% of adults and 35% of teens believed that attending a big name school was important, but not necessary to get ahead.