7 Best Charles Schwab Mutual Funds Of 2023

After years of near-zero interest rates, bond yields have been trending up recently. That makes the Schwab U.S. Aggregate Bond Index Fund an increasingly attractive bet, especially for investors focused on income.

SWAGX is a passively managed, intermediate-term, diversified bond fund. Its current 30-day SEC yield is 4.11%, in contrast to its trailing 12-month dividend yield of 2.67%. Long-term bonds have delivered nearly 6% average annual returns since 1986. With bonds climbing back to their historical yields, a fund like SWAGX is worth considering for all but the most aggressive portfolios.

SWAGX’s effective duration of 6.2 years is a reasonable middle point between a long- and short-term bond fund. Effective duration shows the expected price decline of a bond or bond fund when interest rates rise by 1%. Shareholders can expect the fund to fall in value by 6.2% for each 1% rise in interest rates.

This one Schwab fund offers exposure to U.S. government, agency, mortgage-backed and corporate bonds. There’s also a smattering of cash, foreign and other investment company bonds. If you want to add balance to a stock-fund-heavy portfolio, SWAGX is a sound, low-priced bond mutual fund to consider.