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3 Charles Schwab Mutual Funds Benefiting From Market Tailwinds

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Charles Schwab, founded in 1971, is one of America’s largest and most diversified financial services firms. It oversees more than $10 trillion in assets under management over nearly 38 million brokerage accounts, workplace-plan accounts and banking relationships.

Through its subsidiaries, Schwab offers a full slate of services, from mutual funds and ETFs to wealth management, custody and advisory, while also operating its own bank. Its mutual fund platform is supported by Schwab’s scale, broad distribution reach and deep engagement with retail and advisor clients, making it a formidable presence in the asset management industry.

Charles Schwab’s mutual-fund franchise has ridden the same market and industry currents that shaped the broader asset-management sector in recent years, i.e., large inflows driven by client acquisition and market gains, rising fee pressure from passive competitors and an ongoing shift in revenue mix toward trading and interest income.

Performance for Schwab’s mutual fund lineup in 2025 cannot be divorced from market performance. Equity market strength and heightened trading volumes boosted returns and fee income for many multi-asset products, while fixed-income and cash management benefited from a higher-rate environment that expanded net interest and margin-related revenue. Schwab credited robust trading activity, net interest income and record new asset flows for much of its 2025 earnings growth.

Schwab benefits from size, diversified revenue streams (trading, interest, asset management) and strong new-asset momentum, which can support long-term scale economies and product distribution. Schwab’s 2025 results show operational leverage from scale and market activity, attractive for investors seeking broad exposure to a low-cost, distribution-heavy asset manager, but not without structural risks from industry fee compression.

Astute investors may consider such funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have thus selected three Charles Schwab mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, as well as carry a low expense ratio.

Schwab International Core Equity (SICNX - Free Report) primarily invests in equity securities of publicly traded companies in developed markets outside the United States, allocating most of its assets to stocks. It mainly targets large and mid-cap firms but may also include some small-cap holdings.

Iain Clayton has been the lead manager of SICNX since February 2015. The three top holdings for SICNX are 2.3% in Novartis, 2.2% in Rolls-Royce and 2.1% in Roche.

SICNX’s 3-year and 5-year annualized returns are 23.8% and 13.5%, respectively, and its net expense ratio is 0.86%. SICNX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Schwab MarketTrack All Equity (SWEGX - Free Report) follows a defined asset mix focused entirely on stock investments, with allocations spread across different market segments. Under normal conditions, it commits the vast majority of its assets to stocks, and its actual equity exposure is typically even greater.

Drew Hayes has been the lead manager of SWEGX since February 2023. The three top holdings for SWEGX are 27.4% in Schwab S&P 500 Fund, 16.2% in Schwab International Index and 13.6% in Schwab Fundamental.

SWEGX’s 3-year and 5-year annualized returns are 19.1% and 15.1%, respectively, and its net expense ratio is 0.38%. SWEGX has a Zacks Mutual Fund Rank #1.

Schwab Balanced (SWOBX - Free Report) invests in a mix of other affiliated Schwab funds based on its target allocation, combining equity and fixed-income holdings along with cash or cash-equivalent positions. During periods of unusual market stress or when additional liquidity is needed, it may shift entirely into very short-term, highly liquid instruments such as cash, money market securities, repurchase agreements, or similar obligations.

Drew Hayes has been the lead manager of SWOBX since February 2023. The three top holdings for SWOBX are 36.5% in Schwab U.S. Aggregate, 26.9% in Schwab Core Equity and 15.3% in Schwab Select Largecap.

SWOBX’s 3-year and 5-year annualized returns are 15% and 8.9%, respectively, and its net expense ratio is 0.02%. SWOBX has a Zacks Mutual Fund Rank #1.

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