Is Schwab 1000 (SNXFX) a Strong Mutual Fund Pick Right Now?

Any investors who are searching for Index funds should take a look at Schwab 1000 (SNXFX). While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

History of Fund/Manager

SNXFX finds itself in the Schwab Funds family, based out of San Francisco, CA. The Schwab 1000 made its debut in April of 1991 and SNXFX has managed to accumulate roughly $8.54 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 10.38%, and it sits in the top 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 14.65%, which places it in the top 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. Compared to the category average of 7.28%, the standard deviation of SNXFX over the past three years is 12.23%. Looking at the past 5 years, the fund's standard deviation is 11.99% compared to the category average of 8.24%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. SNXFX lost 50.78% in the most recent bear market and underperformed its peer group by 8%. This makes the fund a possibly worse choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 1.01, so it is likely going to be as volatile as the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. SNXFX has generated a negative alpha over the past five years of -0.4, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Exploring 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 88.89% stock in stocks, which have an average market capitalization of $205.53 billion. The fund has the heaviest exposure to the following market sectors:

1. Technology

2. Finance

This fund's turnover is about 4%, so the fund managers are making fewer trades than comparable funds.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, SNXFX is a no load fund. It has an expense ratio of 0.05% compared to the category average of 0.86%. Looking at the fund from a cost perspective, SNXFX is actually cheaper than its peers.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

Bottom Line

For additional information on the Index area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into SNXFX too 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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