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

This story originally appeared on Zacks

Having trouble finding a mutual fund equity report fund? Well, Schwab Global Real Estate (SWASX) wouldn’t be a good potential starting point right now. SWASX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecast factors such as size, costs and past performance.

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History of the fund / manager

Schwab Funds is based in San Francisco, California and is the manager of SWASX. Schwab Global Real Estate debuted in May 2007 and, according to the latest information available, SWASX has amassed approximately $ 329 million in assets. The fund is currently managed by Wei Li, who has headed the fund since March 2013.

power

Investors naturally look for funds with strong performance. SWASX has an annualized 5-year total return of 7.66% and is in the middle third of its category. If you’re interested in shorter time frames, don’t miss the fund’s 8% annualized 3-year total return, which puts it in the middle third over that time frame.

When looking at the performance of a fund, it is also important to consider the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, the standard deviation of SWASX is 20.58%, compared to the category average of 18.86%. Over the past 5 years, the fund’s standard deviation is 16.78% compared to the category average of 15.55%. This has made the fund more volatile than its peers over the past half decade.

Risk factors

Investors shouldn’t forget about beta, an important way to measure a mutual fund’s risk versus the overall market. SWASX has a 5 year beta of 0.89 which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects the risk-adjusted performance of a portfolio versus a benchmark – in this case the S&P 500. SWASX has generated negative alpha of -6.73 over the past five years, showing that managers in this portfolio have a hard time picking stocks that will outperform the benchmark.

costs

For investors, taking a closer look at cost-related metrics is critical as the cost of mutual fund investments becomes increasingly important. Competition in this area is intensifying and a lower cost product is likely to outperform its otherwise identical counterpart under the same conditions. In terms of fees, SWASX is a no-load fund. It has an expense ratio of 1.05% versus the category average of 1.22%. From a cost perspective, SWASX is actually cheaper than its competitors.

This fund requires a minimum initial investment of USD 0 while there is no minimum amount for any subsequent investment.

Bottom line

Overall, Schwab Global Real Estate (SWASX) ranks low on the Zacks Mutual Fund and, coupled with its comparatively similar performance, average risk of loss and lower fees, this fund appears to be a slightly poor choice for investors at the moment.

For more information on this product, or to compare it to other mutual funds, see the mutual fund share report at www.zacks.com/funds/mutual-funds. If you’d also like to check out our inventory reviews, visit Zacks.com to see all of the great tools we have on offer, including our proven Zacks range.

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