Charles Schwab reported a significant increase in total client assets and new brokerage accounts in January, the latest in a string of positive developments that bode well for both the firm and the financial services industry as a whole.
According to its January Monthly Market Activity Report, total client assets surged to $1.59 trillion last month, up 13.8% from a year earlier and 1.3% from December.
Net new assets brought to the company by new and existing customers totaled $6.4 billion, up from $6 billion in the same month last year -- and that figure included a scheduled $2.1 billion outflow related to a mutual fund clearing services client.
Excluding the scheduled outflow, Schwab garnered net new assets in excess of $8.5 billion in January.
"Total client assets increased as a result of a couple of factors: positive returns in the equities markets and also healthy inflows of new client assets," said Schwab spokesman Greg Gable. "We think the latter reflects renewed confidence among investors coupled with the strength of our business and brand."
Schwab exited the month with more than 8 million active client brokerage accounts, up from 7.7 million accounts in the same period last year and essentially flat from December. However, trading activity improved markedly as average daily trades by its brokerage clients increased to 512,000, up 10% from January 2010 and 28% from December.
This increased volume combined with impressive and mostly sustained growth throughout the equities market in the past year speaks, at least for now, to investors' renewed optimism across most industry sectors.
"Strong U.S. economic signals and solid earnings continue to provide a positive backdrop for stock," Gable said. "We expect pullbacks if optimistic sentiment gets too elevated, but remain optimistic about the stock market."
Last month, Schwab validated some of the optimism among its own investors when it reported its fourth-quarter sales rose 14% from the year-ago quarter and posted net new assets growth of $11 billion, the most in almost two years.
Schwab today also reported that ETF assets held by the firm's clients soared up 34% in 2010, compared to 28% growth for the EFT industry as a whole. It now holds more than $111 billion in ETF assets.
"We continue to see signs of growing engagement among individual investors," Gable added. "[This increased engagement] is driven largely by signs of improvement in the economy and also what has been a significant trend upward in the equities market."
In the past year, the Dow Jones Industrial average has rallied up more than 18% while NASDAQ and the Standard & Poor's 500 Index have enjoyed increases of 26% and 20%, respectively.