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Muni - Bonds fund seekers should consider taking a look at Schwab California Tax-Free Bond Fund (SWCAX - Free Report) . SWCAX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes SWCAX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high tax brackets.
History of Fund/Manager
SWCAX is a part of the Schwab Funds family of funds, a company based out of San Francisco, CA. The Schwab California Tax-Free Bond Fund made its debut in February of 1992 and SWCAX has managed to accumulate roughly $458.57 million in assets, as of the most recently available information. 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 0.25%, and it sits in the bottom 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 1.7%, which places it in the middle third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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. SWCAX's standard deviation over the past three years is 5.12% compared to the category average of 5.26%. The fund's standard deviation over the past 5 years is 4.63% compared to the category average of 4.87%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. SWCAX has a modified duration of 5.7, which suggests that the fund will decline 5.7% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.41% means that a $10,000 investment should result in a yearly payout of $441.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. SWCAX carries a beta of 0.52, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -0.86, which measures performance on a risk-adjusted basis.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, SWCAX is a no load fund. It has an expense ratio of 0.38% compared to the category average of 0.54%. So, SWCAX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Schwab California Tax-Free Bond Fund ( SWCAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Schwab California Tax-Free Bond Fund ( SWCAX ) looks like a great potential choice for investors right now.
This could just be the start of your research on SWCAXin the Muni - Bonds category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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Is SWCAX a Strong Bond Fund Right Now?
Muni - Bonds fund seekers should consider taking a look at Schwab California Tax-Free Bond Fund (SWCAX - Free Report) . SWCAX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes SWCAX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high tax brackets.
History of Fund/Manager
SWCAX is a part of the Schwab Funds family of funds, a company based out of San Francisco, CA. The Schwab California Tax-Free Bond Fund made its debut in February of 1992 and SWCAX has managed to accumulate roughly $458.57 million in assets, as of the most recently available information. 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 0.25%, and it sits in the bottom 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 1.7%, which places it in the middle third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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. SWCAX's standard deviation over the past three years is 5.12% compared to the category average of 5.26%. The fund's standard deviation over the past 5 years is 4.63% compared to the category average of 4.87%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. SWCAX has a modified duration of 5.7, which suggests that the fund will decline 5.7% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.41% means that a $10,000 investment should result in a yearly payout of $441.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. SWCAX carries a beta of 0.52, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -0.86, which measures performance on a risk-adjusted basis.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, SWCAX is a no load fund. It has an expense ratio of 0.38% compared to the category average of 0.54%. So, SWCAX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Schwab California Tax-Free Bond Fund ( SWCAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Schwab California Tax-Free Bond Fund ( SWCAX ) looks like a great potential choice for investors right now.
This could just be the start of your research on SWCAXin the Muni - Bonds category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.