Is Schwab Global Real Estate (SWASX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Equity Report fund seekers should not consider taking a look at Schwab Global Real Estate (SWASX) at this time. SWASX has a Zacks Mutual Fund Rank of 5 (Strong 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 SWASX. Schwab Global Real Estate debuted in May of 2007. Since then, SWASX has accumulated assets of about $363 million, according to the most recently available information. Wei Li is the fund's current manager and has held that role since March of 2013.

Performance

Of course, investors look for strong performance in funds. SWASX has a 5-year annualized total return of 3.77% and it sits in the bottom 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 1.88%, 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, SWASX's standard deviation comes in at 20.45%, compared to the category average of 18.71%. The fund's standard deviation over the past 5 years is 17.59% compared to the category average of 16.19%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. SWASX has a 5-year beta of 0.88, which means it is likely to be less volatile than the market average. 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. With a negative alpha of -6.77, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, SWASX is a no load fund. It has an expense ratio of 1.05% compared to the category average of 1.20%. From a cost perspective, SWASX 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 Global Real Estate ( SWASX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Schwab Global Real Estate ( SWASX ) looks like a somewhat weak choice for investors right now.

Your research on the Mutual Fund Equity Report segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.

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