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Best Charles Schwab Mutual Funds


Review best Charles Schwab mutual funds with top performace and highest return in the last 10 years: Schwab Total Stock Market Index Fund, Schwab S&P 500 Index Fund, Schwab 1000 Index Fund, and Schwab Core Equity Fund.



Charles Schwab for Mutual Fund Investors


This article will list top performing funds from Charles Schwab's own family of mutual funds. If you are looking for information on what Charles Schwab has to offer to mutual funds investors in general then go to Charles Schwab mutual funds review article.


Best Charles Schwab Funds


The Charles Schwab Corporation is one of the leading discount brokers in the country and offers a full line of investment products including a large family of mutual funds. Here are the four best Schwab funds based on 10-year annualized returns, no front-end loads, low expenses, and high ratings from Morningstar. Of note to investors with limited discretionary assets, the minimum initial investment for each of these funds is only $100.

It should also be noted that each of these funds has an early redemption fee of 2.00% on shares sold within 30 days of purchase. This is intended to discourage investors from trying to time the market, which can force liquidation of a large number of shares in a fund's portfolio during a sharp sell-off in the overall market, thereby driving up costs and reducing long-term returns.







Schwab Total Stock Market Index Fund (SWTSX)


This fund seeks to track the overall US stock market as measured by the Dow Jones US Total Stock Market Index. A portfolio of about 2500 stocks provides broad diversification in domestic equities. The fund may invest in derivatives such as futures contracts and may lend its holdings as ways to improve total return.

The 10-year annualized return for SWTSX is 7.73% compared with its benchmark index's (S&P-500 Index) 7.50% return. The fund's net expense ratio is 0.03% compared with the category average of 1.08%. Morningstar has given a 4-star rating to SWTSX.


Schwab mutual funds



Schwab S&P 500 Index Fund (SWPPX)


Like all funds that track the S&P 500, Schwab's version is passively managed and seeks to achieve the same returns as the large-cap stock indices. The main difference between index funds generally comes from higher or lower expenses and other fees that an investor may incur.

The 10-year annualized return for SWPPX is 7.46%, which is nearly identical to the benchmark S&P 500 Index's 7.50% return. The net annual expense ratio is 0.03%, nearly a full percentage point lower than the category average. Morningstar has given a 4-star rating to SWPPX.


Best Schwab funds


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Schwab 1000 Index Fund (SNXFX)


This fund is unique because it seeks to track the performance of one of Schwab's own proprietary indexes, the Schwab 1000 Index. This index includes stocks normally found in the S&P-500 index plus about 500 other large-cap stocks that represent a broader slice of the general stock market. The fund is likely to produce returns comparable to an index such as the Russell 1000 Index.

SNXFX uses a tax-efficient management strategy that minimizes taxable capital gains to shareholders. This makes the fund a good candidate for taxable accounts when compared to similar funds that do not employ such tax strategies.

The 10-year annualized return is 7.34% compared with its benchmark index's 7.50%. The net expense ratio is 0.05%, which is about 75% lower than the category average. Morningstar has given SNXFX a 4-star rating.


Best Schwab index funds


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Schwab Core Equity Fund (SWANX)


This is the only fund of the group that is actively managed, meaning the fund manager makes frequent investment decisions to trade stocks in an attempt to outperform the general stock market, or at least to outperform a benchmark index for the category. This is apparent when one looks at the portfolio turnover of this fund compared to most index funds—63% for the Core Equity Fund vs. a 0-5% turnover for most index funds. More transactions generate higher trading commissions, so expenses are usually higher with actively traded funds.

SWANX invests for long-term capital growth by purchasing mostly large-cap stocks with market capitalizations of at least $500 million. The goal is to outperform the S&P-500 Index over many years. Consequently, volatility may be greater, and this fund may not be suitable for investors who are more conservative.

The fund's 10-year annualized return is 6.75% compared to its benchmark index's 7.50%. Even though it did not outperform the S&P-500 Index during that period, it outperformed the average large-cap blended fund by almost 50 basis points. The fund's expense ratio is 0.73%, compared with its category average of 1.08%, so SWANX still qualifies as a low-expense fund. Morningstar has validated its performance by giving the fund a 4-star rating.


Best schwab mutual fund



Best Charles Schwab Funds Summary


Like many other fund families, the top performers for Schwab (read review) in the past 10 years have been primarily index funds. Schwab's index funds are competitive and are committed to keeping expense ratios low. The Core Equity Fund is worth considering for investors who want to achieve greater returns than the general market and are willing to take on the management risk of an actively-managed portfolio.


Best Charles Schwab Mutual Funds reviewed by Brokerage-Review.com. Rating: 5