The online/discount brokerage (ODB) channel experienced its RRSP season boost at the end of March 2012, although not on par with seasons past. Assets increased by $15.5 billion to finish the opening quarter at $253.6 billion— marginally ahead of the previous high-water mark set one year ago. Registered assets (including TFSAs) were 3.8% ahead of last year, largely driven by RRSP contributions.
Against the backdrop of the global economic malaise and equity market retrenchment in the second half of 2011, self-directed investors favoured conservative investments. By the end of March 2012 GIC and cash holdings had expanded by 10% relative to their level one year before, while equities contracted by 2%. ETFs—particularly those of the fixed income variety—led growth among investment vehicles, posting a 6% expansion over the same period.
Conservative behaviour was also reflected in the divergent activity experience between the last year’s RRSP season and this year’s. In the quarter ended March 2011 transaction volumes and revenues peaked at 15 million trades and $460 million, respectively—levels that have been unmatched since—and gross new accounts crossed the 200,000 threshold. At the end of the first quarter 2012, all indicators were at least 12% below last year’s highs, although they were still well ahead of the last quarter of 2011.
Although there is some evidence that investor fatigue played a role in the reduced activity levels, we believe that a broader theme may be at play. The incipient signs of a shift towards greater balance in the ODB asset mix—traditionally heavily skewed towards equities—are likely a reflection of the changing “identity” of the channel’s clientele. As discussed in our special feature on the channel (please see “Online/discount brokerage: Guided by the evolution of self-reliance” http://investoreconomics.com/issue/retail-brokerage-fall-2011-quarterly-report), in recent years the channel’s target clientele has grown beyond its traditional dominance by the high-frequency traders to include more self-reliant, accumulation-phase, investors. For more information and up-to-date statistics on retail brokerage channels, please refer to the upcoming edition of our Retail Brokerage and Distribution Advisory Service http://investoreconomics.com/issue/the-retail-brokerage-report. Posted by Matthew Goldstein Matthew@iei.ca.