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If investors are looking at the Allocation Balanced fund category, Schwab Balanced Fund (SWOBX) could be a potential option. SWOBX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Zacks' Allocation Balanced funds is an area filled with options, such as SWOBX. 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
Schwab Funds is responsible for SWOBX, and the company is based out of San Francisco, CA. Since Schwab Balanced Fund made its debut in October of 1996, SWOBX has garnered more than $409 million in assets. The fund's current manager, Zifan Tang, has been in charge of the fund since February of 2012.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 9.12%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 9.41%, which places it in the top 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 SWOBX over the past three years is 6.2% compared to the category average of 6.89%. Looking at the past 5 years, the fund's standard deviation is 6.3% compared to the category average of 6.76%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. SWOBX lost 32.51% in the most recent bear market and underperformed its peer group by 3.63%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. SWOBX has a 5-year beta of 0.63, which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a negative alpha over the past 5 years of -0.08, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.