Large Cap Blend fund seekers should not consider taking a look at Schwab Core Equity (SWANX) at this time. SWANX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
SWANX is classified in the Large Cap Blend segment by Zacks, which is an area full of potential. Targeting companies with market caps of more than $10 billion, Large Cap Blend mutual funds offer a stable investment choice; these funds are perfect for investors with a ” buy and hold ” mindset. Since blended funds mix large, more established firms into their portfolios, investors are exposed to both value and growth opportunities.
History of Fund/Manager
Schwab Funds is based in San Francisco, CA, and is the manager of SWANX. Since Schwab Core Equity made its debut in June of 1996, SWANX has garnered more than $1.96 billion in assets. A team of investment professionals is the fund’s current manager.
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 13.46%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 7.43%, which places it in the bottom third during this time-frame.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, SWANX’s standard deviation comes in at 19.19%, compared to the category average of 19.45%. The fund’s standard deviation over the past 5 years is 15.54% compared to the category average of 15.98%. This makes the fund less volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 1.03, which means it is hypothetically as volatile as the market at large. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a negative alpha of -2.64, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.
Right now, 90.45% of this mutual fund’s holdings are stocks, which have an average market capitalization of $298.55 billion. The fund has the heaviest exposure to the following market sectors:
- Retail Trade
With turnover at about 97%, this fund makes more trades in a given year than the average of comparable funds.
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, SWANX is a no load fund. It has an expense ratio of 0.73% compared to the category average of 0.97%. Looking at the fund from a cost perspective, SWANX is actually cheaper than its peers.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Overall, Schwab Core Equity ( SWANX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Schwab Core Equity ( SWANX ) looks like a somewhat weak choice for investors right now.
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