Any investors hoping to find a Small Cap Growth fund could think about starting with Schwab Small-Cap Equity (SWSCX). SWSCX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
SWSCX is part of the Small Cap Growth category, and this segment boasts an array of many other possible options. Small Cap Growth mutual funds usually focus their portfolios on stocks with large growth opportunities and a market cap of under $2 billion. These portfolios tend to feature small companies in up-and-coming industries and markets.
History of Fund/Manager
SWSCX is a part of the Schwab Funds family of funds, a company based out of San Francisco, CA. Since Schwab Small-Cap Equity made its debut in June of 2003, SWSCX has garnered more than $573 million in assets. Jonas Svallin is the fund's current manager and has held that role since August of 2012.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 7.67%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 15.04%, which places it in the bottom third during this time-frame.
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. The standard deviation of SWSCX over the past three years is 16.54% compared to the category average of 16.07%. Over the past 5 years, the standard deviation of the fund is 15.95% compared to the category average of 15.64%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In SWSCX's case, the fund lost 54.71% in the most recent bear market and underperformed comparable funds by 1.74%. This could mean that the fund is a worse choice than comparable funds during a bear market.
Investors should note that the fund has a 5-year beta of 1.18, so it is likely going to be more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. SWSCX has generated a negative alpha over the past five years of -3.88, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, SWSCX is a no load fund. It has an expense ratio of 1.09% compared to the category average of 1.25%. So, SWSCX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Schwab Small-Cap Equity ( SWSCX ) has a high Zacks Mutual Fund rank, similar performance, average downside risk, and lower fees compared to its peers.
Don't stop here for your research on Small Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare SWSCX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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