If you have been looking for Allocation Balanced funds, a place to start could be Schwab MarketTrack Allocation Equity Portfolio (SWEGX). SWEGX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Zacks’ Allocation Balanced funds is an area filled with options, such as SWEGX. 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
SWEGX finds itself in the Schwab Funds family, based out of San Francisco, CA. The Schwab MarketTrack Allocation Equity Portfolio made its debut in May of 1998 and SWEGX has managed to accumulate roughly $915.37 million in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 10.54%, 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 5.61%, which places it in the top third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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. SWEGX’s standard deviation over the past three years is 16.74% compared to the category average of 22%. The standard deviation of the fund over the past 5 years is 18.22% compared to the category average of -53%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.97, so it is likely going to be as volatile as 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. Over the past 5 years, the fund has a negative alpha of -3.51. 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, SWEGX is a no load fund. It has an expense ratio of 0.38% compared to the category average of 0%. From a cost perspective, SWEGX is actually more expensive than its peers.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively strong performance, worse downside risk, and higher fees, Schwab MarketTrack Allocation Equity Portfolio ( SWEGX ) has a high Zacks Mutual Fund rank, and therefore looks a good potential choice for investors right now.
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