U.S. Markets closed

4 Schwab Mutual Funds for Q2

Zacks Equity Research
Cleveland-Cliffs (CLF) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Mutual funds are a great way to diversify investments to build a risk-proof portfolio. The current global economic scenario, especially, is ideal for diversified mutual fund investments.

The International Monetary Fund’s trimmed outlook for global growth this year along with economic slowdown in the Eurozone and the possibility of a full-blown U.S.-EU trade dispute are headwinds in particular.

In this scenario, Schwab mutual funds could be a good choice because of their investments across a variety of asset classes. This helps an investor to own a diversified portfolio and thus tone down risk.

What is Schwab Mutual Fund?

Charles Schwab Investment Management (CSIM) was founded in 1989. The San Francisco-based firm counts among top individual mutual fund providers across the globe. The company focuses on providing effective investment solutions and advisory services to investors.

The investment management firm held $362 billion in assets under management as of August 2018. The firm has been offering smart investment advice to both individual and institutional investors. Jonathan de St. Paer is the current President and Chief Executive Officer of CSIM.

Why Invest in Schwab Mutual Fund?

Charles Schwab mutual funds are an attractive investment for investors because of their low expenses (comprising no redemption fee), low minimum initial investments and great returns that beat the market.

The firm offers a wide range of diversified mutual funds for an all-in-one portfolio allocation objective along with effective professional management of investors’ portfolio. The firm’s investments across numerous asset classes include stocks, cash and bonds etc. This way the firm ensures that clients do not need to research, purchase or track the individual securities that a certain fund comprises.

Secondly, Schwab Index Fund investments allow you to track the performance of a certain index by using Schwab Fundamental Index Funds and Schwab Market Cap Index Funds.

The fundamental index, uses essential measures of company size such as dividends and buybacks, retained operating cash flow and adjusted sales to create the indexes.Schwab Fundamental Index Funds are passively managed funds and follow indexes within Russell RAFI Index Series based on the fundamental index objective.

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 money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Our Choices

We have selected four dividend paying mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5,000.

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.

Schwab MarketTrack Growth Portfolio SWHGX aims for high capital appreciation with lower volatility than an all-stock portfolio. The fund maintains a defined asset allocation to achieve this objective. The fund’s allocation target is stocks, cash and bond investments.In general, the fund invests up to 80% in equity, 15% in fixed income and 5% in cash and cash equivalents. The fund carries a Zacks Mutual Fund Rank #1.

This Zacks sector – Allocation Balanced product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

SWHGX has an annual expense ratio of 0.51%, which is below the category average of 0.77%. The fund generated three and five-year returns of 9.3% and 6.3%, respectively. SWHGX has no minimum initial investment.

Schwab Balanced Fund SWOBX aims for capital appreciation and income. The fund usually invests in a diversified group of other affiliated Schwab and/or Laudus funds.It invests the majority of its assets in equity securities and a minority in fixed income securities, cash and cash equivalents. The fund carries a Zacks Mutual Fund Rank #1.

This Zacks sector – Allocation Balanced product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

SWOBX has an annual expense ratio of 0.50%, which is below the category average of 0.82%. The fund generated three and five-year returns of 8.8% and 6.8%, respectively. SWOBX has no minimum initial investment.

Schwab MarketTrack All Equity Portfolio SWEGX aims for high capital appreciation via an all-stock portfolio. In general, the fund invests at least 80% of its assets in stock investments. The fund maintains a defined asset-allocation in order to achieve its objective. The fund’s objective is to invest 100% in stock investments.The fund carries a Zacks Mutual Fund Rank #1.

This Zacks sector – Allocation Balanced product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

SWEGX has an annual expense ratio of 0.52%, which is below the category average of 0.77%. The fund generated three and five-year returns of 11% and 6.8%, respectively. SWEGX has no minimum initial investment.

Schwab Hedged Equity Fund SWHEX seeks capital appreciation over a long period. The fund invests a majority of its assets in equity securities of U.S. companies. The fund sets up long and short positions in these securities in order to follow its investment objective, which is to pursue capital growth over market cycles with lower volatility than the broader equity market.The fund carries a Zacks Mutual Fund Rank #2.

This Zacks sector – Long Short-Equity product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

SWHEX has an annual expense ratio of 1.67%, which is below the category average of 2.17%. The fund generated three and five-year returns of 5.7% and 5%, respectively. SWHEX has no minimum initial investment.

Want key mutual fund info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week.

Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Get Your Free (SWOBX): Fund Analysis Report
 
Get Your Free (SWHGX): Fund Analysis Report
 
Get Your Free (SWEGX): Fund Analysis Report
 
Get Your Free (SWHEX): Fund Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research