Is Schwab MarketTrack Allocation Equity Portfolio (SWEGX) a Strong Mutual Fund Pick Right Now?

If you have been looking for Allocation Balanced funds, a place to start could be Schwab MarketTrack Allocation Equity Portfolio (SWEGX). SWEGX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

SWEGX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.

History of Fund/Manager

Schwab Funds is responsible for SWEGX, and the company is based out of San Francisco, CA. Schwab MarketTrack Allocation Equity Portfolio debuted in May of 1998. Since then, SWEGX has accumulated assets of about $1.21 billion, according to the most recently available information. The fund's current manager, Zifan Tang, has been in charge of the fund since February of 2012.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 10.54%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.08%, which places it in the top 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 SWEGX over the past three years is 11.09% compared to the category average of 8.79%. Over the past 5 years, the standard deviation of the fund is 14.33% compared to the category average of 10.63%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.88, the fund is likely to be less volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. SWEGX's 5-year performance has produced a negative alpha of -1.21, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, SWEGX is a no load fund. It has an expense ratio of 0.38% compared to the category average of 0.72%. So, SWEGX 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 consideration. Returns would be less if those were included.

Bottom Line

Overall, Schwab MarketTrack Allocation Equity Portfolio ( SWEGX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Want even more information about SWEGX? 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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