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Mutual Fund Bond fund seekers should not consider taking a look at Schwab California Tax-Free Bond Fund (SWCAX) at this time. SWCAX possesses a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
History of Fund/Manager
Schwab Funds is based in San Francisco, CA, and is the manager of SWCAX. The Schwab California Tax-Free Bond Fund made its debut in February of 1992 and SWCAX has managed to accumulate roughly $419.85 million in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 0.77%, and is in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of -1.21%, 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 SWCAX over the past three years is 5.32% compared to the category average of 5.39%. Over the past 5 years, the standard deviation of the fund is 4.35% compared to the category average of 4.44%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.64, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, SWCAX has a negative alpha of -0.62, which measures performance on a risk-adjusted basis.
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, SWCAX is a no load fund. It has an expense ratio of 0.38% compared to the category average of 0.79%. Looking at the fund from a cost perspective, SWCAX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Bottom Line
Overall, Schwab California Tax-Free Bond Fund ( SWCAX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Schwab California Tax-Free Bond Fund ( SWCAX ) looks like a somewhat weak choice for investors right now.
This could just be the start of your research on SWCAXin the Mutual Fund Bond category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio – both funds and stocks – in the most efficient way possible.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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