SCH outperforms AMTD, ET in market, but loses in Barron's

Includes: AMTD, ETFC, SCHW
by: David Jackson

Barron's published (subscription required) its carefully-watched annual ranking of online brokerages over the weekend. The top performing web-based online brokerages with their total point rankings:

  1. optionsXpress 35.5
  2. Ameritrade - Apex 30.8
  3. Fidelity 30.5
  4. E*Trade - Power E*Trade 29.9
  5. Wall Street Electronica 29.5
  6. Muriel Siebert 29.2
  7. Schwab - Active Trader 29.2
  8. Schwab 28.1
  9. TD Waterhouse Trade Central 28.1
  10. E*Trade - Priority E*Trade 27.0
Quick comments:

  • Barron's gives the brokerage services star rankings based on their overall point scores. optionsXpress won four and a half stars; Ameritrade Apex, Fido, and Power E*Trade won four stars; and the others got three-and-a-half stars. So in Barron's view, the active trader services from Ameritrade and Power E*Trade are equally good, but Schwab's lags slightly.
  • Active trader services are important to the brokerages because active traders account for a disproportionate amount of trades (and profits).
  • Note: Schwab's regular service (not for active traders) was broadly equal (equal star ranking) to E*Trade's (Priority E*Trade). Ameritrade Apex requires $100k in assets; no sign of the non-Apex Ameritrade in Barron's ranking.
  • Schwab's stock has outperformed both Ameritrade's and E*Trade's year to date, perhaps because AMTD and ET are more leveraged to trading volumes, and trading sentiment has turned down. See chart below.

Chart: YTD performance of SCH, AMTD and ET. Green is SCH, blue ET and orange AMTD.

Full disclosure: at the time of writing I'm short SCH.