Finding the Best Charles Schwab Mutual Funds

The Charles Schwab Foundation is a renowned financial services company based in the United States. Aside from being known as a reputable online discount brokerage firm, it is also popular for offering low-cost, high-return, and high-quality mutual funds. The terms and conditions set by the company are always attractive to long-term investors.

Through the years, Schwab has attracted beginner investors because the minimum account is $0, and there is no commission for the stocks, mutual funds, and exchange-traded funds (ETFs). You can also avail of the company’s no-load, no transaction fee funds with a minimum investment of $100.

Charles Schwab Mutual Funds

Mutual funds refer to investment vehicles (a bank or a company) that combines the money of different people (called investors) to use it in buying stocks, bonds, or other assets. Every single person who puts in money to a fund gets to have a slice (called shares) of the profit. Instead of putting your money in a single basket, bearing all the risks, a mutual fund allows you to diversify your portfolio and make good investment choices with the help of professionals and advisors.

People choose to buy a mutual fund from companies like Charles Schwab Co Inc because of their years of proven effective investment management that are worth more or less than their original benchmark index through the years.

It has all resources to ensure that the money of the investors is put into investments that will likely give high returns. To date, Schwab investors have two families of index funds two choose from namely Equity Index Funds and Fundamental Index Funds. Both of which have reasonable costs and provide a high, relatively high return to their clients.

What are the Best Schwab Mutual Funds?

If you feel like Schwab fits your criteria in choosing an investment advisor, below is a list of five of the top mutual funds they offer. If you think that investing may be worth pursuing, look at the products below to see if there is a fund that fits your budget and financial goals. This lineup is only about mutual funds. For more information about other index fund Schwab options, read other articles on this website.

1. Schwab S&P 500 Index Fund (SWPPX)

This is a low-cost index fund that needs no minimum investment. It invests in 500 leading companies based in the United States, which covers around 80% of the available US market capitalization. Investing here means investing in the most popular brands and companies in the US. It has an expense ratio of 0.02%. It is fairly unaffected by market volatility.

2.  Schwab Total Stock Market Index Fund (SWTSX)

This index fund tracks the total return of the entire United States stock market as measured by the Dow Jones U.S. Total Stock Market Index. It is meant to have a comprehensive coverage measure of small-, mid-, and large-cap equity securities in the US. It has a total net asset value of $12,665,772,353.71.

3.  Schwab U.S. Broad Market ETF (SCHB)

This is one of the most competitive ETFs managed by Schwab. It is a low-cost fund that provides access to the 2,500 largest publicly traded companies in the United States. Its fund performance is projected to be continuously high in the next 5 to 10 years. An investor should choose this as part of the core of a diversified portfolio.

4. Schwab Health Care Fund (SWHFX)

It is an actively managed fund that targets long-term capital growth. Its focus on the health sector or health care companies which includes medical research facilities, pharmaceutical companies, medical manufacturing businesses, and many more. In contrast to other funds mentioned above which focus on the domestic market, this fund relies on the international market. In terms of fees, it has a net expense ratio of 0.800%.

5. Schwab U.S. Large-Cap Growth ETF (SCHG)

This is a low-cost fund that provides access to large-cap companies in the United States that show growth style characteristics. Some of these companies include Facebook, Apple, Amazon, Microsoft, Visa, and many more. It has an expense ratio of 0.04%. You can purchase this fund as part of the core of your diversified portfolio.

Why is Charles Schwab the Best Trading Platform?

So, why have Schwab brokerage accounts attracted people through the years? The company has built systems that made the process of investing easy. Surely, people who invest would like investment returns. Schwab, through its various products and service offerings, assures that people who choose to entrust their money will likely make a profit.

Here are the key takeaways why Charles Schwab Corporation is the best when it comes to investing. Note that while this article focuses on mutual funds, the factors identified below also apply to those who want to avail of the company’s other products and services like ETFs and other types of funds.

No Load, No Transaction Fees (etfs)

If you buy a mutual fund from Schwab, you are not charged with a transaction as long as you have a minimum investment of $100. As an investor, this is what you have to look for because it means that you will no longer need to pay any sales charges on the trade. For those planning to take investing seriously, the transaction fee means that you can save a lot of money in the long run.

Mutual Fund Selection and Expenses

When it comes to mutual funds, in 2020 Charles Schwab Co. has more than 3,500 funds where you can avail of their no-transaction fees promo. Aside from mutual funds, the company has other funds offered like index funds and ETFs. When it comes to investment expenses, Schwab has a reputation for offering a low operating expense ratio on each of its funds.

To give you an idea, a passively managed Schwab fund usually has an expense ratio of 0.02% – 0.39% while an actively managed fund has an operating expense ratio of 0.22%-1.92%. While each fund has its own expense ratio, the low percentage mentioned above should give you an idea of how low-cost Schwab funds are. Also, take note that the company’s redemption fee of $49.85 will be charged on the redemption of funds.

Provider of Quality Trade Tools and Excellent Stock Research

Schwab provides guidance to its clients through the extensive market and stock research. Aside from employing experts, it has also sought the help of third-party research providers who give premium independent research. Investing in this company means that you can get helpful information from research companies like Morningstar, Credit Suisse, and other prominent and trusted research organizations. Getting information from independent, third-party research organizations can guarantee unbiased decision when it comes to investing. Moreover, investors can do their own research easily as Schwab has made it easy for their clients to screen, compare, and analyze the various funds offered by the company.

Transparency on Account and Investment Minimums

You can avail of Schwab’s no minimum account balances and zero monthly services. All you have to do is to open an account under Schwab One brokerage account. You do not have to maintain a balance in your account, and you are not charged with any recurring fees each month.

Best Trading Platforms for Beginners

Aside from improving its website, Schwab created a trading platform that is easy to use and is friendly even to those not tech-savvy. It is called StreetSmart Edge, which makes charting of funds easy. The platform has integrated tools where users can see potential opportunities. Also, it has risk management features that help users monitor and make necessary actions on open orders and positions.

Also, you can download the StreetSmart Edge as an app. As an investor, this would provide you with more control of your portfolio. You can check the value of stocks and shares as well as look at the market price at your own time. This comfort and accessibility make investing for a lot of people.

Where Charles Schwab Could Improve?

One disadvantage of using Schwab is that it has a low cash sweep rate. Meaning, the uninvested cash in your account will be automatically invested into a deposit account at Charles Schwab Trust Bank, which has an extremely low-interest rate. Just to give you an idea, the annual rate of this account in 2020 is 0.01% only. While the funds swept in this account is insured by the FDIC, the interest rate is too low.

Bottom Line

Surely, there is so much to choose from the long list of Schwab funds. Mutual fund solutions offered by Schwab is a good way to start. Aside from zero to minimal fees, the company has a reputable record of managing ETFs, shares, and index funds effectively. Also, through the years, it has built research and trading platforms that are easy to use even for a member who does not have experience in banking or investing.

Please remember to check out other index fund options offered by Schwab. Most of the funds mentioned above are not actively managed. Search on the company’s site, which can be accessed here to find out the most recent products they are offering. Remember that investing is time-dependent, which means that there is a particular fund right for certain economic and political conditions. Try to look for that product that will give you the biggest possible return.

Meanwhile, if you feel like the information discussed above is not enough, you can check more of our articles on how to invest, manage a fund, and find the best investment advisor in the market. Investoralist also gives its readers updates on trends not only in the field of investment but also in banking, finance, moneylending, and many more. Find the right way of saving and spending your money by reading our articles.

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