The Schwab Small-Cap Equity Fund is designed to offer long-term capital growth by investing primarily in small-cap U.S. stocks.
To pursue its goals, the Fund normally invests at least 80% of its net assets in equity securities of U.S.–headquartered companies–generally those with market caps of up to $2.5 billion. The Fund also has the ability to invest in stocks with market capitalizations of up to $5 billion so long as the portfolio maintains an average weighted market capitalization of $2.5 billion or less.
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Distinguishing Characteristics and Benefits
Driven by Schwab Equity Ratings®
The Fund uses Schwab Equity Ratings to aid its stock selection, which represents Schwab's objective point of view on the 12-month performance outlook for approximately 3,000 of the largest U.S.–headquartered stocks (by market capitalization) ranked by a scale of A through F. It employs a disciplined methodology that evaluates each stock on the basis of investment criteria from four broad categories: fundamentals, valuation, momentum and risk. Generally, the Fund seeks to invest in stocks that are rated A or B at the time of purchase, but may purchase C-rated stocks for purposes of sector diversification.
The Fund has the potential for above-average long-term growth, with investment risks that are higher than those of the stock market as a whole.
The Fund is Schwab's one-step solution for the core U.S. small-cap portion of an asset allocation strategy.