In This Article:
There are plenty of choices in the Muni - Bonds category, but where should you start your research? Well, one fund that may not be worth investigating is Schwab California Tax-Free Bond Fund (SWCAX). SWCAX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes SWCAX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high tax brackets.
History of Fund/Manager
Schwab Funds is based in San Francisco, CA, and is the manager of SWCAX. Schwab California Tax-Free Bond Fund made its debut in February of 1992, and since then, SWCAX has accumulated about $450.74 million in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 0.9%, and is in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3 -year annualized total return of -0.01%, which places it in the bottom third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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 SWCAX over the past three years is 5.55% compared to the category average of 5.58%. The standard deviation of the fund over the past 5 years is 5.03% compared to the category average of 5.18%. This makes the fund less volatile than its peers over the past half-decade.
SWCAX carries a beta of 0.58, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -0.7, which measures performance on a risk-adjusted basis.