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Is Schwab Balanced Fund (SWOBX) a Strong Mutual Fund Pick Right Now?
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There are plenty of choices in the Allocation Balanced category, but where should you start your research? Well, one fund that might be worth investigating is Schwab Balanced Fund (SWOBX - Free Report) . SWOBX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
SWOBX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
History of Fund/Manager
SWOBX finds itself in the Schwab Funds family, based out of San Francisco, CA. Schwab Balanced Fund made its debut in October of 1996, and since then, SWOBX has accumulated about $386 million in assets, per the most up-to-date date available. The fund's current manager, Zifan Tang, has been in charge of the fund since February of 2012.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 8.32%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.18%, which places it in the top 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, SWOBX's standard deviation comes in at 6.98%, compared to the category average of 7.04%. The fund's standard deviation over the past 5 years is 6.53% compared to the category average of 6.88%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. SWOBX lost 32.51% in the most recent bear market and outperformed its peer group by 3.67%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Even still, the fund has a 5-year beta of 0.63, so investors should note that it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a negative alpha over the past 5 years of -0.16, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, SWOBX is a no load fund. It has an expense ratio of 0.62% compared to the category average of 0.90%. Looking at the fund from a cost perspective, SWOBX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $100 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Schwab Balanced Fund has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Schwab Balanced Fund looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Allocation Balanced, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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Is Schwab Balanced Fund (SWOBX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Allocation Balanced category, but where should you start your research? Well, one fund that might be worth investigating is Schwab Balanced Fund (SWOBX - Free Report) . SWOBX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
SWOBX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
History of Fund/Manager
SWOBX finds itself in the Schwab Funds family, based out of San Francisco, CA. Schwab Balanced Fund made its debut in October of 1996, and since then, SWOBX has accumulated about $386 million in assets, per the most up-to-date date available. The fund's current manager, Zifan Tang, has been in charge of the fund since February of 2012.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 8.32%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.18%, which places it in the top 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, SWOBX's standard deviation comes in at 6.98%, compared to the category average of 7.04%. The fund's standard deviation over the past 5 years is 6.53% compared to the category average of 6.88%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. SWOBX lost 32.51% in the most recent bear market and outperformed its peer group by 3.67%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Even still, the fund has a 5-year beta of 0.63, so investors should note that it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a negative alpha over the past 5 years of -0.16, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, SWOBX is a no load fund. It has an expense ratio of 0.62% compared to the category average of 0.90%. Looking at the fund from a cost perspective, SWOBX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $100 and that each subsequent investment has no minimum amount.
Bottom Line
Overall, Schwab Balanced Fund has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Schwab Balanced Fund looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Allocation Balanced, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.