3 Charles Schwab Funds Investors Should Have: Zacks
Charles Schwab earned top scores for three of its mutual funds from Zacks Investment Research, which gave all three funds a strong buy rating. In a research report, Zacks said that all three funds – one that covers small-cap stocks, another that is invested in all equities and a third that invests in tax-free bonds – will likely outperform their rivals in the future.
Take the Schwab Small-Cap Equity Fund for starters. This mutual fund invests most of its money in small-cap companies that fall within the Russell 2000 Index. The fund aims to do better than the Russell 2000 Index and is up 18.4% so far in 2017. The top holdings of the Schwab Small-Cap Equity Fund include Progress Software Corporation (PRGS), Lexington Realty Trust (LXP.PC), International Bancshares Corporation (IBOC), PS Business Parks, Inc. (PSB) and First Citizens BancShares, Inc. (FCNCA), according to Morningstar. Technology leads the pack in terms of the sectors, with the investment vehicle also focusing on financial services, healthcare, industrials and consumer cyclicals. The fund has an expense ratio of 1.1%.
[Want to invest with a quality broker? Read Investopedia's broker reviews first.]
Another highly rated mutual fund owned by The Charles Schwab Corporation (SCHW) is the Schwab MarketTrack All Equity Portfolio Fund, which aims to keep all of its assets invested in stocks. The fund has returned 21.2% in the past 12 months and is invested in different areas of stocks. According to Morningstar, the mutual fund's top sectors include financial services, technology, industrials, consumer cyclicals and healthcare. It has a low expense ratio of 0.55%, and as of September 2017, 31.46% of its assets were invested in the Schwab S&P 500 Index. The fund is also invested in the Schwab Small Cap Index, Schwab International Index, Schwab Fundamental U.S. Large Company Index and Schwab Fundamental U.S. Small Company Index.
On the bond side of things, Zacks rates the Schwab CA Tax-Free Bond Fund as a strong buy, with a return of 2.3% this year. The fund invests a large portion of its assets in investment-grade municipal bonds that are rated between AAA and BBB-, Zacks said. A lot of the fund's assets are invested in muni securities that are issued by the state of California. It has an expense ratio of 0.49%, so it is cheap compared with the average expense ratio for similar funds, which Zacks said is 0.80%.