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Is Schwab MarketTrack Growth Investor (SWHGX) a Strong Mutual Fund Pick Right Now?

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

Objective

The world of Zacks' Allocation Balanced funds is an area filled with options, such as SWHGX. These funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. For investors, Allocation Balanced funds can provide an entry point into diversified mutual funds, and present core holding options for a portfolio of funds.

History of Fund/Manager

SWHGX is a part of the Schwab Funds family of funds, a company based out of San Francisco, CA. The Schwab MarketTrack Growth Investor made its debut in November of 1995 and SWHGX has managed to accumulate roughly $803 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.

Performance

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 6.26%, and it sits 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 7.96%, 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. The standard deviation of SWHGX over the past three years is 7.98% compared to the category average of 6.62%. Looking at the past 5 years, the fund's standard deviation is 8.27% compared to the category average of 6.9%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In SWHGX's case, the fund lost 45.28% in the most recent bear market and underperformed comparable funds by 9.04%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 0.8, so it is likely going to be less volatile than the market at large. 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. Over the past 5 years, the fund has a negative alpha of -2.5. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, SWHGX is a no load fund. It has an expense ratio of 0.39% compared to the category average of 0.90%. So, SWHGX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $100 and that each subsequent investment has no minimum amount.

Bottom Line

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

This could just be the start of your research on SWHGXin the Allocation Balanced category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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