Have you been searching for a Small Cap Growth fund? You might want to begin with Schwab Small-Cap Equity (SWSCX - Free Report) . SWSCX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
SWSCX is part of the Small Cap Growth category, and this segment boasts an array of many other possible options. Small Cap Growth mutual funds usually focus their portfolios on stocks with large growth opportunities and a market cap of under $2 billion. These portfolios tend to feature small companies in up-and-coming industries and markets.
History of Fund/Manager
Schwab Funds is based in San Francisco, CA, and is the manager of SWSCX. The Schwab Small-Cap Equity made its debut in June of 2003 and SWSCX has managed to accumulate roughly $632 million in assets, as of the most recently available information. Jonas Svallin is the fund's current manager and has held that role since August of 2012.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 4.69%, and is 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 5.44%, 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. Compared to the category average of 16.7%, the standard deviation of SWSCX over the past three years is 18%. Looking at the past 5 years, the fund's standard deviation is 16.86% compared to the category average of 16.71%. This makes the fund more volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In SWSCX's case, the fund lost 54.71% in the most recent bear market and underperformed its peer group by 2%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. SWSCX has a 5-year beta of 1.18, which means it 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. With a negative alpha of -5.93, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Exploring 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 principally on equities that are traded in the United States.
Right now, 96.79% of this mutual fund's holdings are stocks, which have an average market capitalization of $2.09 billion. The fund has the heaviest exposure to the following market sectors:
- Industrial Cyclical
With turnover at about 112%, this fund makes more trades in a given year than the average of comparable funds.
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, SWSCX is a no load fund. It has an expense ratio of 1.09% compared to the category average of 1.22%. SWSCX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Overall, Schwab Small-Cap Equity ( SWSCX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
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