Mutual Fund Reviews: Charles Schwab

Charles Schwab mutual funds are named after Charles R. Schwab, the Founder and Board of Directors Chairman of Charles Schwab Corporation (SCHW). Charles Schwab mutual funds began in 1984, and have evolved into a developed and researched medley of investment selections as managed by a financial services firm that is well entrenched within the industry. Schwab mutual funds include over 60 funds and more than $230 billion in managed assets.

Schwab funds are subdivided by management and itemization categories. For example, fund groups include those maintained by Charles Schwab Investment Management and/or Laudus funds, or funds that are a part of Schwab's Mutual Fund One Source and Mutual Fund Select List programs. Many of the Schwab funds are no load and no transaction fee meaning they do not charge for purchase or sale of the mutual funds, but rather pay for services through maintenance fees and/or service charges. Some of the Charles Schwab mutual funds include affiliated funds such as the Laudus funds in addition to Schwab owned and managed funds such as the following:

• Schwab Tax-free bond fund (SWNTX)
• Schwab balanced fund (SWOBX)
• Schwab Market track growth portfolio (SWHGX)
• Schwab Core Equity Fund (SWANX)
• Schwab Inflation Protected Fund (SWRSX)

Charles Schwab mutual funds focus on a number of investment areas such as bonds, international investments, small through large capitalization companies, dividend yielding investments etc. Several Schwab funds have 4 and 5 star Morningstar ratings in 3, 5 and 10 year averages, meaning they are in the top quarter of all U.S. mutual funds in terms of risk weighted returns.

Mutual fund performance

Assessing Charles Schwab mutual fund performance depends on the investor's goals, however most investors do like to see a profit on their investment making returns an important factor in determining performance. In this category, Schwab's funds seem to have a fairly close beta to the relevant index or investment group that the funds represent.

Secondly, in terms of money management, Charles Schwab gets top marks for professionalism, ability and skill of portfolio managers and customer service(s). Charles Schwab is a premier discount brokerage service that hasn't forgotten what quality of service is and the importance of the client-firm relationship.

A third factor for which Schwab funds can be measured by is cost. Since there are many no load and no transaction fee mutual funds provided by Schwab, the cost factor is clearly quite good and quite a few of Schwab's mutual funds have expense ratios well below 1% and closer to the .5% range.

Variety and choice is another area in which Schwab funds excel as the company provides a wealth of mutual fund investment options for investors seeking to place funds in mutual funds and/or seek tax free growth. Additionally, the range of mutual fund options can meet a number of risk levels, where even in times of heavy economic recession, the tax-free bond fund has maintained a positive return near 2%. Schwab funds also have the option of low investment minimum further adding value to the investment dynamic.

Summary

If you're looking for somewhere to park your money where it will be professionally managed, diversified, and somewhat safe for a low cost, Charles Schwab mutual funds might be worth considering. The company's public mutual funds business has been around since the 1980's, has a proven management track record and is well known and reputable within the financial services industry.

In terms of performance, there may be better investments to choose from. Despite this, mutual funds can serve a purpose in balancing portfolios and risk, in which case selecting Charles Schwab mutual funds can be a feasible option. The option for low minimum investments for a low cost with inflation protected, tax free and taxable bond funds and further diversified investment choices make Charles Schwab mutual funds worth a look.

Sources:

1. http://www.aboutschwab.com/about/facts/mutual-funds.html
2. http://tinyurl.com/5vgljss (BusinessWeek)
3. http://tinyurl.com/ma4c8m (Schwab)

Written 05/05/2009