A look at recent numbers
Asset management and administration fees are a component of Charles Schwab’s (SCHW) total net revenues. In the first quarter, the company generated total asset management and administration fees of $851 million. Of that amount, mutual funds and ETFs contributed $493 million, and total advice solutions contributed $282 million.
Schwab’s money market funds are expected to see inflows from investors who are willing to take a lesser risk. In the first quarter, total mutual funds and ETFs had average client assets of $895.7 billion, while total advice solutions had $284.5 billion.
What could help in Q2 2018?
Trade tensions between the United States and China could make the stock markets volatile and might also dampen investor sentiment. After restricting China from making investments in the US technology sector, tensions have increased. Moving forward, the markets might witness a downtrend or higher volatility, and investors could adjust their portfolios, which would boost their engagement and aid brokerages (VFH) such as E*TRADE Financial (ETFC), TD Ameritrade Holding (AMTD), and Interactive Brokers Group (IBKR).
Investors might deploy their capital in assets with less of a risk such as debt instruments. As a result, Schwab money market funds are expected to see a boost in inflows in the second quarter. That could lead to higher balances, which could lead to higher asset management and administration fees, thus improving the company’s total net revenues.
Next, let’s look at Charles Schwab’s valuations.