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Schwab Income Select List

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Our experts have selected a list of income mutual funds for investors in or nearing retirement.  The Schwab Income Mutual Fund Select List® can help you build a portfolio of mutual funds with the potential for both growth and income.  Plus, these growth and income funds have no-loads or transaction fees, leaving you more money to invest..

  • All funds on the Income Select List are prescreened by Schwab experts.
  • View funds by category, including taxable and tax-free bond funds, domestic and international equity funds, and more.

Facts about mutual funds for income and growth.

Schwab developed the Income Mutual Fund Select List to help investors in or nearing retirement build or modify an investment portfolio to address their growth income needs. Here are some things to consider as you develop or fine-tune your portfolio:

  • Asset allocation. As always, your portfolio's asset allocation should be driven by your investment goals, time horizon, and risk tolerance. As your goals shift from accumulation to income, you can use the funds on this list to help address your income and growth needs from both bond and equity funds.
  • Diversification. Investors in or nearing retirement often believe that they should be exclusively in bonds and other fixed income assets. While this might be an appropriate strategy for some investors, you may want to consider keeping a percentage of your portfolio in equities for the capital appreciation potential they provide.
  • Risk vs. return. Evaluate yields within the context of risk: Different categories or asset classes will reflect differing risk/reward trade-offs. Consider a mix of bond funds: government, municipal, and corporate. A fund's exposure to below-investment-grade bonds is also important to keep in mind. One of the selection criteria for fixed income funds on the Income Select List is relatively low exposure to these types of securities. (To see a fixed income fund's credit rating, click on the fund name, then the Portfolio tab.)
  • Maturity. Bond funds with longer maturities can leave investors exposed to greater inflation and credit risk, so consider a balance of maturities, from ultrashort to long.
  • Distribution frequency. Different funds provide payouts on different schedules. Check the frequency of distributions to determine when you'll receive income, if any, from the fund.
  • Taxes. Remember tax implications. Income on investments in non-retirement accounts is generally taxable; in tax-protected retirement accounts, such as IRAs and 401(k)s, it's less of a concern. Where appropriate, consider tax-free bond funds.

Diversification does not eliminate the risk of investment losses. Bond funds are subject to increased loss of principal during periods of rising interest rates. Please consult a tax professional for tax advice.
To build the Schwab Income Mutual Fund Select List, Charles Schwab Investment Advisory, Inc. (CSIA) starts by analyzing the actively managed funds tracked by Morningstar using the quantitative and qualitative selection criteria. Then, based on its analysis, CSIA builds the Income Select List by selecting the most favorably evaluated OneSource funds, including Schwab Funds® and Laudus Funds® (“Schwab Affiliate Funds”), within each Morningstar Category.

Eligibility Requirements

Each Income Select List fund must:

  • Be no-load and open to new investors at Schwab in all 50 states.
  • Have a minimum three-year performance track record (except funds that are listed in the Leading Schwab Affiliate Funds sections of the Income 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, high-yield, multisector bond, world bond, emerging markets equity and bond, diversified Pacific Asia, Pacific Asia ex-Japan, Europe, Japan, Latin America, convertible, retirement income, target date, 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.
  • Demonstrate a track record of making income distributions in each of the prior five calendar years (or during every full calendar year since inception in the case of funds with less than a five-year track record, including Schwab Affiliate Funds, which may have a 12-month track record).
  • For fixed income funds, make income distributions on at least a quarterly basis, and—with the exception of the high-yield, multisector and emerging markets bond categories—not allocate in excess of 30% to issues rated below investment grade.
  • For equity funds, offer a current yield in excess of their category average; and for equity funds with “dividend” or “income” in their name, make income distributions on at least a quarterly basis.
  • With the exception of specialty sectors (such as Real Estate Investment Trusts) and fixed income funds, not allocate in excess of 33% to any single sector.

Selection Criteria

Actively managed OneSource funds, including Schwab Affiliate Funds, are evaluated by CSIA based on risk, performance, expenses, style consistency, diversification, and, when meaningful, assets under management and asset flows. In addition, those funds with the best capital preservation attributes and investment strategies that focus on selecting income-generating securities will receive preference when selecting from similarly rated funds with comparable yield characteristics. For funds not affiliated with Schwab, CSIA also may consider additional qualitative factors (e.g., management strategy, portfolio composition and management tenure, consistency of fund performance, and CSIA’s evaluation of a fund over time) when making a final evaluation.

Leading Schwab Affiliate Funds sections of the Income 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 and have similar investment styles, CSIA may determine that only the most favorably evaluated fund(s) be included on the list. Because Schwab Affiliate Funds included in the Leading Schwab Affiliate Funds sections of the Income 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 Third-Party Funds sections of the list.

Leading Third-Party Funds sections of the Income 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 that receive the most favorable evaluations in their respective asset categories.

Take the next step.

Open an account and use our Income Mutual Fund Select List to see a portfolio designed for growth and income that meets your needs.

Open an Account  or call 888-445-4515.



Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by clicking on Investor Information or 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.