Is Schwab Core Equity (SWANX) a Strong Mutual Fund Pick Right Now?

Any investors hoping to find a Large Cap Blend fund could think about starting with Schwab Core Equity (SWANX). SWANX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

SWANX is classified in the Large Cap Blend segment by Zacks, which is an area full of potential. Targeting companies with market caps of more than $10 billion, Large Cap Blend mutual funds offer a stable investment choice; these funds are perfect for investors with a 'buy and hold' mindset. Since blended funds mix large, more established firms into their portfolios, investors are exposed to both value and growth opportunities.

History of Fund/Manager

Schwab Funds is based in San Francisco, CA, and is the manager of SWANX. Schwab Core Equity debuted in June of 1996. Since then, SWANX has accumulated assets of about $1.48 billion, according to the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 10.36%, 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 15.69%, which places it in the bottom 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. The standard deviation of SWANX over the past three years is 11.74% compared to the category average of 12.65%. Over the past 5 years, the standard deviation of the fund is 14.47% compared to the category average of 15.46%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.91, the fund is likely to be less 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. SWANX has generated a negative alpha over the past five years of -1.62, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, SWANX is a no load fund. It has an expense ratio of 0.72% compared to the category average of 0.71%. So, SWANX is actually more expensive 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 consideration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively weak performance, average downside risk, and higher fees, Schwab Core Equity ( SWANX ) has a neutral Zacks Mutual Fund rank, and therefore looks a somewhat average choice for investors right now.

Want even more information about SWANX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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