Mutual funds are an affordable way to help diversify your portfolio.
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Mutual funds let you pool your money with other investors to "mutually" buy stocks, bonds, and other investments.
Mutual funds let you access a wide mix of asset classes, including domestic and international stocks, bonds, and commodities.
Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are typically lower than what you would pay as an individual investor.
Buying mutual funds can be straightforward. Many banks and brokerage firms, including Schwab, have their own line of proprietary mutual funds as well as access to thousands of third-party funds.
You get the benefit of having a professional manager reviewing and researching the fund's portfolio on an ongoing basis.
These funds typically strive to beat the market. They're overseen by portfolio managers who select securities they think will outperform benchmarks. As such, actively managed funds are usually more expensive.
Index fundsThese funds, known as index funds, are designed to track—rather than beat—a specific index, such as the S&P 500 ® . They can be a low-cost way to invest.
Both mutual funds and exchange-traded funds (ETFs) pool money from many investors and invest that money in securities. Likewise, many investors own a mix of these funds. Before you decide what's right for you, there are things to consider.
Both generally provide broad, diversified exposure to an asset class, region, or a specific market niche.
Mutual fund trades are executed once a day, at a single price. ETFs are exchange-traded and can be bought and sold intraday at different prices.
Investing costs can be a key factor in your net return. It's important to understand how mutual funds assess fees and expenses. These fall into three broad categories:
Operating expense ratio (OER)OERs cover the fund's operating expenses and are annually factored into the total return you receive.
A load is a one-time commission some fund companies charge whenever you buy or sell shares in certain load-based mutual funds.
Transaction fee Brokerage firms may charge a trading fee whenever you buy or sell mutual fund shares.These funds aim to meet the fund's objectives by investing in traditional assets (equities, fixed income, and/or cash) using traditional strategies (fundamental relative value, indexing, etc.). A large majority of funds fall into this category.
Specialty mutual fundsThese funds aim to meet the fund's objectives through non-traditional investments and trading strategies, such as investing in commodities, or making investments based on environmental or social governance guidelines.
Find 4,000+ no-load, no transaction fee mutual funds from Schwab Asset Management™ and other fund companies.
Choose mutual funds with our help. Get the expertise to build a strong mutual fund portfolio on your terms. Simplify with our all-in-one solutions. Choose the mutual fund according to your investing goal, then we do the rest.Investors should consider carefully information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling 800-435-4000. Please read the prospectus carefully before investing.
Investment value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
Schwab's short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwab's Mutual Fund OneSource service (and certain other funds with no transaction fees) and held for 90 days or less. Schwab reserves the right to exempt certain funds from this fee, including Schwab Funds, which may charge a separate redemption fee, and funds that accommodate short-term trading.
Trades in no-load mutual funds available through the Mutual Fund OneSource service (including Schwab Funds), as well as certain other funds, are available without transaction fees when placed through Schwab.com or our automated phone channels. For each of these trade orders placed through a broker, a $25 service charge applies. Schwab reserves the right to change the funds we make available without transaction fees and to reinstate fees on any funds.
Charles Schwab & Co., Inc., member SIPC, receives remuneration from fund companies participating in the Mutual Fund OneSource service for recordkeeping and shareholder services and other administrative services. Schwab also may receive remuneration from transaction fee fund companies for certain administrative services.
Charles Schwab Investment Management, Inc., dba Schwab Asset Management, is the investment advisor for Schwab Funds. Charles Schwab & Co., Inc. (Schwab), Member SIPC, is the distributor for Schwab Funds. Schwab Asset Management and Schwab are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
