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About Schwab Managed Portfolios

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Charles Schwab Investment Advisory, Inc. (CSIA) is a team of experienced analysts responsible for overall portfolio management of Schwab Managed Portfolios™. Learn more about the research behind Schwab Managed Portfolios from CSIA's Chief Investment Officer Jim Peterson and others in the videos below.

Schwab Managed Portfolios  - Who is Charles Schwab Investment Advisory?
Learn how the professionals at CSIA apply their research and portfolio management expertise in Schwab Managed Portfolios and other Schwab products and services. Watch now.
Jim Peterson: Charles Schwab Investment Advisory or CSIA is proud to be one of the central research and portfolio management teams at Schwab.

CSIA's team of analysts and portfolio managers provide three main services to Schwab clients.

First, CSIA selects mutual funds, ETFs and separately managed accounts for a variety of Schwab lists and services, such as the Mutual Fund and ETF Select Lists and its Managed Account Select program.

Working closely with the Schwab Center for Financial Research, CSIA also builds the primary asset allocation plans used at Schwab. 

These plans provide guidance on how to spread the portfolio across investments to meet a particular goal. 
Our team at CSIA also provides all of the long-term return estimates used for the creation of the model plans as well as for goal planning.

Finally, we use all of these tools to manage portfolios. 

And we only manage investment portfolios for Schwab and its affiliates. 

Over 140,000 clients use our services across investment strategies like Schwab Managed Portfolios - Mutual Funds and Schwab Managed Portfolios - ETF. 

We also provide portfolio management services for Schwab Intelligent Portfolios™ offered through Schwab Wealth Investment Advisory, Inc.

For further information, talk to your Schwab investment professional who will be happy to provide you with additional resources that explain our approach to research and investment management.
How do we manage risk?
Schwab Managed Portfolios ™ - How do we manage risk?
Managing risk is about more than timing moves in and out of the market. At Charles Schwab Investment Advisory, Inc., (CSIA) we believe that risk management begins with asset allocation. Watch now.
Jim Peterson: At Charles Schwab Investment Advisory, managing risk is not just about making big timing moves in and out of the market.
In fact, timing like that can add risk to a portfolio, not lessen it.

Risk management in our portfolios begins with asset allocation - that is, how we spread the portfolio across different types of investments and around the globe.

And, we build that asset allocation for today's world; not the markets of the 90's or early 2000's.

We do this by investing in US stocks and bonds as well as international stocks and bonds.
We invest in real assets such as gold, industrial metals, and US as well as international real estate.

Each of these investments is designed to tap into a specific source of risk or return.

The reason we use these broad groups of investments is because the risk in more traditional investment strategies tends to be driven almost entirely by equity risk - that is, the risk is coming from the stock portion of the portfolio.

So, even in a traditional balanced portfolio of 60% stocks and 40% bonds we have found that up to 99% of the risk - or 99% of variability in returns - comes from traditional stocks.

This factor alone can cause a pretty rocky ride for investors that we seek to smooth out.

So when we build a balanced portfolio today we use an expanded set of investments that give investors exposure to multiple sources of risk and return.

This is key, and to us the most important factor when it comes to managing risk.
What is rebalancing and how is it done?
Schwab Managed Portfolios – What is rebalancing and how is it done?
Getting an asset allocation plan in place is an important first step toward implementing a successful investing program.  Keeping it in shape with rebalancing is also a central feature of Schwab Managed Portfolios ™.  Watch now
Jim Peterson: A disciplined rebalancing process is a critical part of investing.

There's an old saying that to be a successful investor you should be fearful when others are greedy, and greedy when others are fearful.

That is often an important truth when it comes to investing.

The question is, How do you know when to do this?

That can be a very tricky, and costly exercise if you're trying to time your way in and out of volatile markets.

A big part of the portfolio management process is managing risk. Making sure that the portfolio doesn't become significantly more or less risky than planned.

Rebalancing is one of the main ways we do this.

Any portfolio we manage at Charles Schwab Investment Advisory has a defined set of asset classes, such as large cap stocks or small cap stocks, along with target investment percentages or ranges.

We monitor markets every day and when the actual portfolio weights deviate from your target investment weights by a material amount, you can expect to see us rebalance.

We do this by trimming some of the holdings that have performed well while adding to those positions that have fallen in price.

The key to rebalancing is being disciplined and rebalancing strictly based on rules and on a timely basis.
Doing so helps to manage risk and encourages a contrarian investment style.
As human beings, we don't like to sell our winners and buy the losers.
However, doing so is fundamental to achieving long-term returns while efficiently managing risk.
How do we select Mutual Funds?
Schwab Managed Portfolios – Mutual Funds – How do we select mutual funds?
Looking only at past performance when selecting mutual funds often provides an incomplete view for investors. Learn how the professionals at CSIA utilize forward-looking techniques and in-person visits when selecting funds for Schwab Managed Portfolios. Watch now.
Jim Peterson: When selecting a mutual fund, you need to be careful not to chase performance.

Unfortunately, tools like Morningstar's Star Ratings tend to encourage this behavior because they are based strictly on a single factor - past returns.

The problem for most people when it comes to evaluating performance is they don't have the tools and data needed to distinguish skill from luck.

Instead, they tend to look mostly at the performance of a fund for the past year, or maybe a few years back, and assume that performance will continue in the future.

At Charles Schwab Investment Advisory we believe that while past performance does matter, it's the potential for future performance that matters the most.

The question we ask is, “What types of factors can tell us something about how a fund might perform going forward?”

We use a variety of statistical techniques to help us estimate future return potential.

But there's math, and then there is the people side of things.

In many cases we also conduct in-person visits with fund managers which can provide valuable insight as well.

It is important to look at both performance and non-performance based factors when selecting mutual funds.

Fund size, measured by assets under management, is an example of a non-performance based factor.

It's not uncommon to see a fund that was high performing in the past getting flooded with new assets.

For managers who rely on fundamental analysis and stock picking expertise, all of those assets can make it difficult for them to focus only on their best ideas.

Instead of closing the fund to new investors, some managers respond to all those new assets by investing more closely with the benchmark index they follow.

We call this “closet indexing”.

What you don't want is to be late to the game and pay higher fees for a fund that is really doing nothing more than closet indexing.

The bottom line is that selecting funds is really about separating luck from skill when looking at a mutual fund's returns and evaluating the likelihood that a fund's performance versus its benchmark or peers will repeat.

Measurements like these as well as knowing the portfolio management teams at a particular fund company are most important to us.

Questions? We're ready to help.

Talk to a Schwab investment professional today to see if Schwab Managed Portfolios—ETFs are right for you.