Upbeat music plays throughout.
Narrator: One of the simplest ways to build a long-term portfolio is to invest in a handful of funds that represent different asset classes. With so many different choices, selecting a fund can seem overwhelming. In this demo, I'll show you how to use the ETF and Mutual Fund Screeners on schwab.com to search for low-fee index funds that represent different asset classes, like stocks and bonds.
For my example long-term investment portfolio, the types of funds I'm going to look for are domestic equity funds of any market cap, international equity funds, and bond funds.
To find these funds, I'll point to Research, then under Research Tools, select ETFs.
From here, I can select ETF Screener. This tool lets you sort through available ETFs to find ones that meet certain criteria.
Let's start off by looking for an ETF to fill the domestic large-cap equity portion of my portfolio. To limit my results to stock funds, I'll select Basic, Fund Category, and then US Equity.
This opens up a selection of Morningstar Categories to choose from. I'm looking for types of funds that contain domestic large-cap stocks, so I'll check the box next to Large Blend. For an investor who's searching for a fund that's as diversified as possible, a blend would likely be the best choice because it contains a mix of growth and value stocks.
Animation: Search results narrow to 224 matches.
Narrator: As you can see, this narrows my search results, but I want to go a step further and find funds with low fees, so I'll also add Net Expense Ratio as a filter.
An expense ratio is an annual rate the fund charges to pay for portfolio management, administration, and other costs.
Here, I'm able to screen for funds with an expense ratio less than or equal to a particular value. For this example, I'll look for ETFs with an expense ratio below a quarter percent.
Animation: Search results narrow from 224 to 82 matches.
Narrator: As you can see, this further narrows my search results, but there are still a lot of funds that match these criteria, so let's add one more.
Let's look for funds that are part of the Schwab ETF Select List®. The ETFs on the Select List were picked primarily based on their low cost of ownership and have been screened to ensure a basic standard of liquidity, viability, and structural stability.
You can see this has boiled things down to just 9 matches.
Let's take a look at the ETFs that match our criteria.
On-screen text: Disclosure: The Net Expense ratio is calculated using the net fund expenses after any expenses were waived and/or partially absorbed by fund management.
Animation: Selecting the Net Expense Ratio column to sort the matches from low to high.
From here, I can sort by lowest Net Expense Ratio.
Animation: Screen shows a U.S. Broad Market ETF profile page.
Narrator: If I want more information about a fund, I can select its symbol to view its profile and chart.
Animation: Screen returns to matches and cursor selects "Save Screen". Box pulls up to type in "Large-Cap Blend" as the screen name and selects "Save".
Narrator: I'm not going to pick a specific fund right now, but I can save this particular screen if I want to easily access it in the future.
To access saved screens, select My Saved Screens.
Animation: Select "Modify Criteria" to return to previous criteria selections.
Narrator: Now that I have searched for large-caps funds, I'm going to look for a fund for the mid-cap portion of my portfolio. I can modify my fund category criteria and change the large-cap selection to Mid-Cap Blend.
You can follow a similar process for finding funds for other assets classes in your portfolio.
For example, if I'm also looking for an international equity fund, I'll change my fund category to International Equity.
You'll see a few choices here that say "Global" and "Foreign" and may wonder what the difference is; simply, the global categories include U.S. stocks.
Because I've already looked for separate funds for my U.S. equity allocation, I want just international, so I'll select Foreign Large Blend.
My other criteria are still applied, and you can see I have 5 matches.
You can use the ETF Screener to find bond ETFs as well, but some investors prefer to buy mutual funds instead of ETFs. So, let's walk through an example of how to find a mutual fund on the Schwab Mutual Fund Screener.
First, I'll point to Research, then select Mutual Funds.
Similar to ETFs, I'm also able to use the Mutual Fund Screener to find low-expense index mutual funds.
The Mutual Fund Screener works a lot like the ETF Screener but has slightly different choices.
Let's say I'm interested in bond funds. I can follow the same steps as before—opening the basic category and selecting the Fund Category checkbox.
From there, I can select Taxable Bond and then Intermediate Core Bond. This category contains funds that invest in a mix of investment-grade bonds from the United States.
Once again, I'm going to search for funds with low expense ratios. For this example, I'll select a Net Expense Ratio of less than half a percent.
I'll also filter for funds that are part of the Schwab Select List®.
Some, but not all, mutual funds may have a minimum investment requirement.
If you only have a certain dollar amount that you can invest, use the search box to search Minimum Investment. Let's suppose I have $2,500 to invest in my bond fund, so I'll filter for funds that meet that requirement.
This leaves me with 3 matches to choose from.
For new investors, the endless number of choices can make investing seem overwhelming. Using these simple screeners can be a quick way for investors to search for low-expense index fund candidates.
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