Government - Bonds: Misc fund seekers may want to consider taking a look at Schwab Treasury Inflation Protected Security (SWRSX). SWRSX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
We classify SWRSX in the Government - Bonds: Misc category, an area rife with potential choices. Government - Bonds: Misc funds hold securities issued by the federal government of the United States of America. These are seen as extremely low risk securities from a default perspective, and are often regarded as risk-free assets. This category stretches across the curve, so the yields and interest rate sensitivity will vary, though a mixed approach generally results in a medium yield and risk profile.
History of Fund/Manager
SWRSX finds itself in the Schwab Funds family, based out of San Francisco, CA. Since Schwab Treasury Inflation Protected Security made its debut in March of 2006, SWRSX has garnered more than $746 million in assets. The fund is currently managed by Matthew Hastings who has been in charge of the fund since March of 2006.
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 1.14%, 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 1.54%, 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 3.06%, the standard deviation of SWRSX over the past three years is 3.17%. The standard deviation of the fund over the past 5 years is 3.66% compared to the category average of 3.36%. This makes the fund more volatile than its peers over the past half-decade.
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
If you believe interest rates will rise, this is an important factor to look at. SWRSX has a modified duration of 7.47, which suggests that the fund will decline 7.47% for every hundred-basis-point increase in interest rates.
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 0.82% means that a $10,000 investment should result in a yearly payout of $82.
A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. This fund has a beta of 1.01, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, SWRSX has a negative alpha of -1.01, which measures performance on a risk-adjusted basis.
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, SWRSX is a no load fund. It has an expense ratio of 0.05% compared to the category average of 0.80%. Looking at the fund from a cost perspective, SWRSX is actually cheaper than its peers.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Overall, Schwab Treasury Inflation Protected Security ( SWRSX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund 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 Government - Bonds: Misc, make sure to go to www.zacks.com/funds/mutual-funds for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.