UPDATE 1-Schwab's client trading levels dip in July

Tue Aug 14, 2012 11:06am EDT

* Trading levels down 2 pct from July 2011, 5 pct from June

* Clients add $7.4 billion in net new assets

* Schwab ends month with 8.7 mln active brokerage accounts

NEW YORK, Aug 14 (Reuters) - Trading volume at Charles Schwab Corp, one of the largest U.S. brokerages, dipped 2 percent in July from a year earlier, falling short of some analysts' expectations as retail investors remained on the sidelines.

Schwab clients made an average 396,100 trades a day last month, compared with 404,100 a day in the year-ago period. Trading levels were down 5 percent from June.

"This was a soft result considering earnings season usually drives an increase in activity," David Trone, an analyst at JMP Securities, said in a note to clients.

Ed Ditmire, an analyst at Macquarie Capital, said he had expected an average of 503,000 trades per day in July.

Retail investors have been reluctant to invest in the equities markets for many months, as concerns over the strength of the global economic recovery have trumped hopes of higher returns than fixed income or money funds can provide due to rock-bottom interest rates.

That has weighed on revenue from fees and commissions at U.S. discount brokerages.

Large-capitalization stock mutual funds at Schwab had $268.3 million in outflows, and small- and medium-cap stock funds had $163 million in outflows.

Schwab clients bought $2.3 billion in taxable bond funds, $408.3 million in tax-free bond funds, and $722.2 million in money market funds.

Clients of San Francisco-based Schwab added $7.4 billion in net new assets in the month, down 25 percent from July 2011, but up 28 percent from June.

Total client assets were $1.82 trillion.

Schwab ended the month with 8.7 million active brokerage accounts, up 7 percent from a year earlier, and flat from June.