Founded in 1989, Charles Schwab Investment Management, Inc. provides diverse investment products to its clients, including institutional and private investors. Charles Schwab Investment’s assets under management were more than $485 billion as of Dec 31, 2019. The company has been in the business for more than 25 years and is presently the third largest provider of index mutual funds.
Schwab Investment offers a variety of products including money market funds, ETFs, index funds and asset allocation funds. The main objective of the company is to provide effective investment solutions that fulfill the needs of its investors. With its experienced workforce, the company has been able to offer the best opportunities worldwide.
Schwab mutual funds might hog the limelight in the months ahead as these funds not only diversify your portfolio but also offer a combination of low expenses and low minimum investments.
Why Schwab Mutual Funds?
Investing in Schwab mutual funds gives you an array of options for building a diversified portfolio. Schwab mutual funds consist of money market funds, index funds, fixed income and asset allocation funds.
Asset allocation funds, in particular, allow you to invest in various asset classes, such as stocks, cash and bonds.
Investing in index funds gets easier with Schwab because you can find low-cost funds that track the performance of a specific index with the help of Schwab Fundamental Index Funds and Schwab market cap index funds. Schwab S&P 500 Index Fund (SWPPX – Free Report) is one such fund that tracks the S&P 500 Index.
Given the equity market volatility over the past few months owing to geopolitical and macroeconomic issues, one might choose to focus on bonds and cash investment at this point rather than solely focusing on stock funds. Schwab offers a wide variety of both bonds as well as equity funds.
3 Best Funds
Given such circumstances, we have highlighted three Schwab mutual funds, carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy) that are poised to gain. Moreover, these funds have encouraging one and three-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Schwab Core Equity Fund (SWANX – Free Report) seeks appreciation of capital for the long run. SWANX invests the bulk of its assets in equity securities of domestic companies. The fund generally targets companies with a market cap of more than $500 million. It seeks to maintain a portfolio of companies whose performance is expected to beat that of the broader S&P 500 Index in the long run.
This Sector – Large Cap Blend product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the one-year and three-year benchmarks are 18.8% and 12.4%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
The fund carries a Zacks Mutual Fund Rank #2 and has an annual expense ratio of 0.73%, which is below the category average of 0.94%.
Schwab MarketTrack Growth Portfolio (SWHGX – Free Report) seeks growth of capital. SWHGX aims to maintain a specific asset allocation for its portfolio. The portfolio generally remains near the target allocation of 15% fixed income, 80% equity and 5% cash and cash equivalents.
This Sector – Allocation Balanced product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the one-year and three-year benchmarks are 12.4% and 8.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
The fund sports a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.51%, which is below the category average of 0.77%.
Schwab California Tax-Free Bond Fund (SWCAX – Free Report) aims for high current income exemption from federal and California personal income tax, which are necessary for capital preservation. The fund mainly invests in investment grade municipal securities.
This Zacks sector – Muni-Bonds product has a history of positive total returns for more than 10 years. Specifically, the fund’s returns over the one-year and three-year benchmarks are 6.9% and 4.2%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
This Zacks Mutual Fund Rank #2 fund has an annual expense ratio of 0.49%, which is below the category average of 0.78%.
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