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Is Schwab Small-Cap Index (SWSSX) a Strong Mutual Fund Pick Right Now?
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Are you on the hunt for an Index fund? You should think about starting with Schwab Small-Cap Index (SWSSX - Free Report) . While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.
History of Fund/Manager
Schwab Funds is responsible for SWSSX, and the company is based out of San Francisco, CA. Schwab Small-Cap Index made its debut in May of 1997, and since then, SWSSX has accumulated about $4.19 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of -0.19%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of -4.56%, 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, SWSSX's standard deviation comes in at 21.15%, compared to the category average of 7.29%. The standard deviation of the fund over the past 5 years is 19.13% compared to the category average of 8.11%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. SWSSX lost 53.08% in the most recent bear market and underperformed its peer group by 10%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Nevertheless, with a 5-year beta of 1.26, the fund is likely to be more volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. Over the past 5 years, the fund has a negative alpha of -7.14. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Investigating 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 largely on equities that are traded in the United States.
Right now, 99.45% of this mutual fund's holdings are stocks, with an average market capitalization of $2.34 billion. The fund has the heaviest exposure to the following market sectors:
Finance
Industrial Cyclical
Technology
With turnover at about 14%, this fund is making fewer trades than its comparable peers.
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, SWSSX is a no load fund. It has an expense ratio of 0.04% compared to the category average of 0.84%. So, SWSSX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Bottom Line
For additional information on this product, or to compare it to other mutual funds in the Index, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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Is Schwab Small-Cap Index (SWSSX) a Strong Mutual Fund Pick Right Now?
Are you on the hunt for an Index fund? You should think about starting with Schwab Small-Cap Index (SWSSX - Free Report) . While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.
History of Fund/Manager
Schwab Funds is responsible for SWSSX, and the company is based out of San Francisco, CA. Schwab Small-Cap Index made its debut in May of 1997, and since then, SWSSX has accumulated about $4.19 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of -0.19%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of -4.56%, 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, SWSSX's standard deviation comes in at 21.15%, compared to the category average of 7.29%. The standard deviation of the fund over the past 5 years is 19.13% compared to the category average of 8.11%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. SWSSX lost 53.08% in the most recent bear market and underperformed its peer group by 10%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Nevertheless, with a 5-year beta of 1.26, the fund is likely to be more volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. Over the past 5 years, the fund has a negative alpha of -7.14. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Investigating 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 largely on equities that are traded in the United States.
Right now, 99.45% of this mutual fund's holdings are stocks, with an average market capitalization of $2.34 billion. The fund has the heaviest exposure to the following market sectors:
- Finance
- Industrial Cyclical
- Technology
With turnover at about 14%, this fund is making fewer trades than its comparable peers.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, SWSSX is a no load fund. It has an expense ratio of 0.04% compared to the category average of 0.84%. So, SWSSX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Bottom Line
For additional information on this product, or to compare it to other mutual funds in the Index, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.