Yahoo Finance Is Schwab Small-Cap Equity (SWSCX) a Strong Mutual Fund Pick Right Now?
Looking for a Small Cap Growth fund? You may want to consider Schwab Small-Cap Equity (SWSCX) as a possible option. SWSCX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Small Cap Growth funds is an area filled with options, such as SWSCX. These funds tend to create their portfolios around stocks that sport large growth opportunities and market capitalization of less than $2 billion. The companies in these portfolios are usually on the smaller side, and are 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. Schwab Small-Cap Equity debuted in June of 2003. Since then, SWSCX has accumulated assets of about $637.53 million, according to the most recently available information. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. SWSCX has a 5-year annualized total return of 10.95% and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 7.59%, 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. SWSCX's standard deviation over the past three years is 21.25% compared to the category average of 0%. The fund's standard deviation over the past 5 years is 23.45% compared to the category average of 76%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
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 1.12, which means it is likely to be more volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a negative alpha over the past 5 years of -4.01, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
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 largely on equities that are traded in the United States.
The mutual fund currently has 94.97% of its holdings in stocks, with an average market capitalization of $4.48 billion. The fund has the heaviest exposure to the following market sectors:
Finance
Industrial Cyclical
Technology
Other
Turnover is 92%, which means, on average, the fund makes more trades in a given year than the category average.
Expenses
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 1.08% compared to the category average of 94%. Looking at the fund from a cost perspective, SWSCX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Schwab Small-Cap Equity ( SWSCX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, Schwab Small-Cap Equity ( SWSCX ) looks like a somewhat average choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Small Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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