If you’ve been stuck searching for Small Cap Growth funds, you might want to consider passing on by Schwab Small-Cap Equity (SWSCX) as a possibility. SWSCX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.
The world of Small Cap Growth funds is an area filled with options, such as SWSCX. These funds tend to create their portfolios around stocks that sport large growth opportunities and market capitalization of less than $2 billion. The companies in these portfolios are usually on the smaller side, and are 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. Schwab Small-Cap Equity debuted in June of 2003. Since then, SWSCX has accumulated assets of about $646 million, according to the most recently available information. Jonas Svallin is the fund’s current manager and has held that role since August of 2012.
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 11.17%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 7.53%, 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. Over the past three years, SWSCX’s standard deviation comes in at 26.24%, compared to the category average of 25.79%. Looking at the past 5 years, the fund’s standard deviation is 21.57% compared to the category average of 21.09%. This makes the fund more volatile than its peers over the past half-decade.
The fund has a 5-year beta of 1.26, so investors should note that it is hypothetically more volatile than the market at large. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. SWSCX’s 5-year performance has produced a negative alpha of -8.21, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.
Currently, this mutual fund is holding 98.02% stock in stocks, which have an average market capitalization of $3.64 billion. The fund has the heaviest exposure to the following market sectors:
Turnover is about 82%, so those in charge of the fund make more trades in a given year than the category average.
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, SWSCX is a no load fund. It has an expense ratio of 1.08% compared to the category average of 1.21%. So, SWSCX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Overall, Schwab Small-Cap Equity ( SWSCX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Schwab Small-Cap Equity ( SWSCX ) looks like a somewhat weak choice for investors right now.
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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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