Best Charles Schwab Mutual Funds
Among its wide range of financial services, Charles Schwab develops and oversees its own set of mutual funds. These funds can be traded through Schwab and also at various other brokerage firms in the U.S. and internationally. Below are four in particular that we really like:
Schwab Fundamental US Large Company Index Fund (SFLNX)
First up is SFLNX, Schwab’s Fundamental US Large Company Index Fund. One aspect we really appreciate is the strong ratings from Morningstar, which can be seen on Schwab’s website and other sources. The fund has a maximum 5-star rating overall. For its 3-year performance, Morningstar awards 4 stars out of 5. Its return rating is high, while its risk rating is average, indicating a favorable risk-return balance.
As its name states, it mostly holds large-cap companies based in the United States. Some are mid-cap and others are mega-cap, so large-cap is more of a midpoint. Examples of positions include Apple, Walmart, and Exxon Mobil. The portfolio spans many economic segments, such as energy, finance, and consumer staples.
SFLNX has zero load and no transaction fee if bought or sold at Schwab. Its management fee stands at 0.25%, which is relatively low because of its passive approach (it tracks the Russell RAFI™ US Large Company Index). With that low expense ratio, there’s naturally no 12b-1 fee. There’s also no short-term redemption fee at Schwab, so it’s very inexpensive to own.
The fund’s 12-month trailing return is 12.59%. While that’s below the S&P 500’s figures, Schwab’s fund has exceeded the index over 15-year and 3-year spans. It has also beaten the averages of its Morningstar category (large value) over various time periods.
Schwab Treasury Inflation Protected Securities Index Fund (SWRSX)
Next on our list is a bond fund: SWRSX, which stands for the Schwab Treasury Inflation Protected Securities Index Fund. It invests in U.S. Treasury-issued inflation-protected bonds. Its effective maturity is 7.22 years, and its effective duration is 6.68. Because the holdings are strictly Treasury instruments, the average credit rating is AAA.
Morningstar’s assessment is slightly lower, awarding 4 out of 5 stars overall and for 10-year results. The fund’s historical return is seen as above average, while its risk level is classified as average.
On Schwab’s profile for SWRSX, the Morningstar style box indicates moderate interest-rate sensitivity and high credit quality, which matches what we’ve noted.
Even though its Morningstar ratings aren’t as high as our first fund, SWRSX is actually cheaper to hold, charging only 0.05% per year. Schwab keeps costs this low by following a passive strategy. It tracks the Bloomberg US Treasury Inflation-Linked Bond Index.
Like the equity fund we discussed above, this Treasury fund has no loads whatsoever. Schwab also imposes no transaction fees for buying or selling it. There are no additional fees such as 12b-1 charges or short-term redemption costs.
SWRSX has surpassed its benchmark across multiple longer-range intervals we looked at, such as 1-year, 3-year, 5-year, 10-year, and 15-year performance. It has also outdone its inflation-protected bond category in many of these periods.
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Schwab S&P 500 Index Fund (SWPPX)
Another choice we highly recommend from Schwab is its S&P 500 fund, traded under the ticker SWPPX. This fund follows the well-known American market gauge with extremely low expenses, charging just 0.02% a year. As with the other funds mentioned, there are no hidden costs tied to ownership or trades.
Compared to other funds mirroring the S&P 500 Index, Schwab’s option appears to perform well, as Morningstar has assigned 4 and 5 stars across all measured intervals. The fund’s low expense ratio likely contributes to these impressive marks. Its category, large blend, sees an average ratio of 0.79%. SWPPX manages to surpass its index by a few points in each timeframe.
SWPPX is part of Schwab’s Mutual Fund OneSource Select List, indicated by a blue ‘Select List’ emblem on Schwab’s website or mobile app. Funds on the Select List have gone through Schwab’s scrutiny for fees, returns, risk, and payouts, meaning it has been singled out by the firm’s investment analysts.
With a minimum buy-in of just $1, even very small accounts can invest. You can also arrange ongoing purchases, letting you set up modest, repeated buys on autopilot.
Putting in a trade for SWPPX (or any other fund) on Schwab’s platforms is simple. The broker’s site has two interfaces, classic and Beta, both of which have prominent trade buttons on a fund’s page. Clicking one of these leads to the same order screen, where a buyer can opt to reinvest dividends or capital gains. The choices are:
- Reinvest capital gains only
- Reinvest dividends and capital gains
- None
On Schwab’s mobile app, the same reinvestment options appear. It shows an approximate share count that will be purchased based on the money you’ve entered, something the website does not do.
Schwab Health Care Fund (SWHFX)
Finally, let’s take a look at SWHFX, Schwab’s health care fund. Unlike our previous three funds, this one is actively managed. That means it doesn’t copy a benchmark index. Instead, it tries to surpass the market by selectively trading stocks in the medical sector. The managers in charge are Iain Clayton and Wei Li, who have been at the helm since 2015 and 2013, respectively—both fairly lengthy histories that can be reassuring.
Like the S&P 500 fund, SWHFX appears on Schwab’s Select List, meaning the company’s experts endorse it. Morningstar likewise approves, granting 4 out of 5 stars overall, labeling the risk low and the return average. Similar to our other featured funds, there are no additional fees or loads besides the 0.80% expense ratio, which is quite fair for an actively managed fund and lower than its peer group’s average of 1.02%.
Schwab’s fund profile for SWHFX includes a downloadable report card in pdf format that repeats most of the details found on the site. Some of its holdings listed on the document include:
- UnitedHealth Group
- Johnson & Johnson
- Novo Nordisk A/S ADR
- Abbott Laboratories
Locating SWHFX or any other mutual fund on Schwab’s site is made easier with the firm’s fund screener (not found on the mobile app). Just select the Research tab at the top and pick the mutual funds link on the next page.
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Best Charles Schwab Funds Summary
Like in many fund families, Schwab’s top performers (read review) over the last decade have mostly been index-based funds. Schwab’s index products are highly competitive and strive to keep fees minimal. The Core Equity Fund is a solid choice for investors who aim to exceed general market returns and don’t mind the potential drawbacks of an actively managed approach.
Updated on 3/3/2025.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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