Any investors hoping to find an Allocation Balanced fund could think about starting with Schwab MarketTrack Allocation Equity Portfolio SWEGX . SWEGX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
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 based in San Francisco, CA, and is the manager of SWEGX. The Schwab MarketTrack Allocation Equity Portfolio made its debut in May of 1998 and SWEGX has managed to accumulate roughly $685 million in assets, as of the most recently available information. The fund is currently managed by Zifan Tang who has been in charge of the fund since February of 2012.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 9.99%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 10.28%, which places it in the top 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 6.89%, the standard deviation of SWEGX over the past three years is 10.4%. Over the past 5 years, the standard deviation of the fund is 9.92% compared to the category average of 6.76%. This makes the fund more volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. SWEGX lost 53.33% in the most recent bear market and outperformed its peer group by 17.19%. This could mean that the fund is a better choice than comparable funds during a bear market.
Investors should note that the fund has a 5-year beta of 0.98, so it is likely going to be as volatile as the market at large. 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. With a negative alpha of -2.5, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 0.39% compared to the category average of 0.89%. SWEGX is actually cheaper than its peers when you consider factors like cost.
Investors need to be aware that with this product, the minimum initial investment is $100; each subsequent investment has no minimum amount.
Overall, Schwab MarketTrack Allocation Equity Portfolio has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Schwab MarketTrack Allocation Equity Portfolio looks like a good potential choice for investors right now.
Your research on the Allocation Balanced segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.