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Is Schwab Balanced Fund (SWOBX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for SWOBX

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This story originally appeared on Zacks

There are plenty of choices in the Allocation Balanced category, but where should you start your research? Well, one fund that might be worth investigating is Schwab Balanced Fund (SWOBX). SWOBX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

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Objective

The world of Zacks' Allocation Balanced funds is an area filled with options, such as SWOBX. 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

Schwab Funds is based in San Francisco, CA, and is the manager of SWOBX. Schwab Balanced Fund debuted in October of 1996. Since then, SWOBX has accumulated assets of about $730 million, 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

Obviously, what investors are looking for in these funds is strong performance relative to their peers. SWOBX has a 5-year annualized total return of 11.6% and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 11.74%, 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 12.92%, the standard deviation of SWOBX over the past three years is 12.04%. Over the past 5 years, the standard deviation of the fund is 9.68% compared to the category average of 10.48%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.63, so it is likely going to be less volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a negative alpha of -0.19, 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, SWOBX is a no load fund. It has an expense ratio of 0.51% compared to the category average of 0.89%. So, SWOBX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Schwab Balanced Fund ( SWOBX ) 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 SWOBX? 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. 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.



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