This is an application to Charles Schwab’s OneSource Select List mutual funds. These funds are No Load and No Transaction Fee (NTF) mutual funds. Based on Schwab’s policy, the no load NTF funds have 90 days redemption fee period. As of 1/1/2010, there are total 140 OneSource Select List funds avaiable from Schwab. $49.95 short term redemption fee is charged for a fund held less than 90 days.
This plan could be also used by participants who are in Schwab Personal Choice Retirement Account (PCRA) either through self-directed 401K brokerage link or self-directed IRA accounts.
Here is the detailed description on how these funds are selected by Schwab (as of 9/1/2011):
OneSource Select List
With thousands of mutual funds available, finding the right funds for your portfolio can seem more time-consuming and difficult than ever. The Mutual Fund OneSource Select List®, consisting only of OneSource funds available without a load or transaction fee, is a smart solution that can help you make confident investment decisions.
To build the OneSource Select List, Charles Schwab Investment Advisory, Inc. (CSIA) starts by analyzing the actively managed funds tracked by Morningstar using quantitative and qualitative selection criteria described below. Then, based on its analysis, CSIA builds the Mutual Fund OneSource Select List by selecting the most favorably evaluated OneSource funds, including Schwab Funds and Laudus Funds (“Schwab Affiliate Funds”), within each Morningstar category.
Eligibility RequirementsEach OneSource Select List fund must:
- Be no-load and open to new investors at Schwab.
- Have a minimum three-year performance track record (except funds that are listed below the “Leading Schwab Affiliate Funds” sections of the OneSource Select List. These funds are eligible if they have a minimum 12-month-performance track record under their current management and/or current investment objectives and strategy).
- Have at least $40 million in assets (except for small-cap value, world bond, emerging market, and specialty funds, which require at least $20 million in assets). To meet this requirement, assets in multiple share classes of the same fund may be aggregated.
- For fixed income funds, have an average portfolio credit quality consistent with the fund’s category average.
- For balanced funds, require consistent exposure to both stocks and bonds.
Selection Criteria
Actively Managed OneSource Funds, including Schwab Affiliate Funds, are evaluated by CSIA based on a quantitative analysis of risk, performance, expenses, diversification, and when meaningful, assets under management and asset flows. CSIA also may apply additional qualitative factors to its analysis to enhance its overall evaluation of a fund, including, for example, changes in a fund’s investment strategy or management structure, portfolio manager tenure, whether a fund’s investment style and portfolio holdings are representative of its investment category, portfolio composition and turnover rates, consistency of a fund’s performance and CSIA’s evaluation of the fund over time, and other risk and diversification considerations.
Leading Schwab Affiliate Funds sections of the OneSource Select List feature eligible actively-managed Schwab Affiliate Funds that generally fall into the top 35% of all CSIA evaluated funds (including OneSource and non-OneSource funds) in their respective Morningstar categories. If two or more Schwab Affiliate Funds fall within the top 35% of funds within a given Morningstar category also have similar investment styles, CSIA may determine that only the most favorably evaluated fund(s) be included in the list. Because Schwab Affiliate Funds included in the “Leading Schwab Affiliate Funds” section of the OneSource Select List are selected independently from other actively managed funds on the list, they may have received a less favorable evaluation overall than the funds listed in the “Leading 3rd Party Funds” sections of the list.
Leading 3rd Party Funds sections of the OneSource Select List feature eligible actively managed third party OneSource funds that generally fall within the top 35% of all CSIA evaluated funds within a given Morningstar category and which receive the most favorable evaluations in their respective categories. CSIA generally includes the five most favorably evaluated funds in each of the large-cap, small-cap, intermediate-term bond, municipal national intermediate and foreign large blend asset categories and the two most favorably evaluated funds in all other asset categories. If two or more of the most favorably evaluated funds within an asset category have similar investment styles, CSIA may substitute a less favorably evaluated fund for one or more of those funds to provide a more diverse selection of fund investment strategies.
The Index Fund section of the Select List features up to two index funds for each of the large-cap, small-cap, international, and taxable bond asset classes. Index funds have different selection criteria than actively managed OneSource funds. These funds are evaluated primarily on expense ratio, how well the fund tracks the category benchmark as determined by CSIA, how well the fund performs compared to its stated benchmark, and assets under management.
The third-party index fund and Schwab affiliate index fund that receives the most favorable evaluation by CSIA in each asset class is included on the Select List. If two index funds receive equal evaluations, CSIA will generally include the fund that has the lower expense ratio.
Additional Important InformationApproximately 2,100 funds participate in the Mutual Fund OneSource® service. Only these funds, including Schwab Affiliate Funds, are eligible for the OneSource Select List. Schwab receives remuneration from fund companies, and/or their affiliates, in the Mutual Fund OneSource service for record keeping, shareholder services and other administrative services. Schwab and its affiliates also receive fees from the Schwab Affiliate Funds for investment advisory and fund administration services. The aggregate fees Schwab or its affiliates receive from Schwab Affiliate Funds (see fund prospectuses for more details) are greater than the remuneration Schwab receives from other fund companies participating in Schwab’s Mutual Fund OneSource service. The amount of fees Schwab or its affiliates receive from funds participating in the Mutual Fund OneSource service is not considered in the Select List selection, nor does any fund pay Schwab to be included in the Select List. Eligible funds are selected based solely on the quantitative and qualitative criteria described above.
Schwab Affiliate Funds include Schwab Funds and Laudus Funds. Schwab Funds and Laudus Funds are advised by Charles Schwab Investment Management, Inc. Schwab Funds and the Laudus MarketMasters Funds are distributed by Charles Schwab & Co., Inc. and Laudus Funds (except Laudus MarketMasters Funds) are distributed by ALPS Distributor, Inc.
Investment options of Jeanne`s Schwab OneSource Select List Funds
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Investment model portfolios
We provide two types of investment model portfolios for Jeanne`s Schwab OneSource Select List Funds participants. You can customize and follow a model portfolio in your plan account.
Types of portfolio strategies
- Strategic asset allocation portfolio: It invests in a diversified portfolio of multiple assets, buy-and-hold without frequently changing the asset allocation weights.
- Suitable: For long-term (more than 15 years, preferably more than 20 years), want to be tax efficient and can withstand interim drawdown or loss as high as 50% or more.
- Pros:
- Less error-prone
- Infrequent rebalancing or transactions
- Tax efficient for taxable brokerage investments
- Cons:
- Interim loss or drawdown can be substantial
- Possible low returns for an extended period, such as 10 years or longer
- Tactical asset allocation portfolio: it invests in a diversified portfolio of multiple assets, dynamically adjust stock and bond allocations to minimize losses during market stress.
- Suitable: For long-term (more than 10 years or preferably longer) capital. Investors are willing to rebalance as frequent as monthly.
- Pros:
- Reduce large interim loss or drawdown
- Less sensitive to investment entry point
- Likely to improve returns
- Cons
- Demand more frequent rebalancing or transactions
- Less tax efficient — more suitable in a tax-deferred account such as 401(k) or IRA
- Can experience a period of lower returns compared to a broad-based strategic allocation or a buy-and-hold benchmark, especially in some bull markets
These portfolios are proactively monitored and rebalanced on a monthly basis when needed, ensuring it remains in line with its target allocation.
Let us know (Email us) if you need help to create a custom model portfolio for your plan.
Example model portfolios
The following provides historical returns for example model portfolios with a moderate risk profile (at most 60% in stocks) and their comparison with benchmark index funds. You can customize these portfolios according to your own risk profile.
Strategic Asset Allocation Model Portfolio
The following portfolio is based on the MyPlanIQ Strategic Asset Allocation (SAA) strategy.
Tactical Asset Allocation Model Portfolio
The following portfolio is based on the MyPlanIQ Tactical Asset Allocation (TAA) strategy.
| Name | YTD Return | 1Yr AR | 3Yr AR | 5Yr AR | 10Yr AR | 15Yr AR | 20Yr AR | Common | Inception |
|---|---|---|---|---|---|---|---|---|---|
| Jeanne`s Schwab OneSource Select List Funds Tactical Asset Allocation Moderate | NA | -3.49% | 3.82% | 2.38% | 6.40% | 7.78% | NA | … | … |
| VFINX (VANGUARD 500 INDEX FUND INVESTOR SHARES) | NA | 7.18% | 10.93% | 11.18% | 13.10% | 8.60% | 6.45% | … | … |
| VSMGX (VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES) | NA | -0.24% | 4.98% | 4.97% | 7.82% | 5.92% | 5.61% | … | … |