Fund Evaluator:

Schwab Health Care Overview

Schwab Health Care (SWHFX) is an actively managed Sector Equity Health fund. Schwab Funds launched the fund in 2000.

The investment seeks long-term capital growth. To pursue its goal, the fund primarily invests in equity securities issued by companies in the health care sector. The health care sector may include, for example, pharmaceutical and biotechnology companies, health care facilities operations, medical product manufacturers and suppliers, medical providers and medical services firms. It is the fund's policy that under normal circumstances it will invest at least 80% of its net assets in these securities; typically, the actual percentage will be higher. The fund will concentrate its investments in securities of companies in the health care sector.

About Schwab Health Care (SWHFX)

There are 2 members of the management team with an average tenure of 12.20 years: Wei Li (2013), Iain Clayton (2015). Management tenure is more important for actively managed funds than passive index funds.

The fund has 2 primary benchmarks: S&P 500 (TR) (1970) index with a weighting of 100% and DJ Global Health Care TR USD index with a weighting of 100%. Schwab Health Care has 83 securities in its portfolio. The top 10 holdings constitute 48.9% of the fund’s assets. The fund meets the SEC requirement of being classified as a diversified fund. The fund is not considered to have an ESG focus with its investment selection and management.

Schwab Health Care is part of the Equity global asset class and is within the Sector Equity fund group. Schwab Health Care has 19.0% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 81.0%. There is 19.0% allocated to foreign stock, and 0.0% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 0.0% (0.0% domestic bond, 0.0% foreign bond and 0.0% convertible bond). Schwab Health Care has 0.1% of the portfolio in cash.

Assets Under Management

The fund has $641 million in total assets, which is below the $869 million average for the Health category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.

SWHFX Performance and Fees

The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The Schwab Health Care expense ratio is high compared to funds in the Health category. Schwab Health Care has an expense ratio of 0.80%, which is 34% lower than its category average, making the fund expense ratio grade a B. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.

High portfolio turnover can translate to higher expenses and lower aftertax returns. Schwab Health Care has a portfolio turnover rate of 41%, indicating that holds its assets around 0.0 years. By way of comparison, the average portfolio turnover is 61% for the Health category.

Recently, in the month of June 2026, Schwab Health Care returned 5.6%, which earned it a grade of F, as the Health category had an average return of 8.4%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all funds in that category.

Schwab Health Care has a trailing yield of 0.92%, which is above the 0.39% category average. The fund normally distributes its income annually and its capital gains annually.

It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.

Schwab Health Care Grades

Year to date, the fund has returned 2.5%, 5.1 percentage points worse than the category, which translates into a grade of F. The fund has returned 18.0% over the past year (grade of F), 7.4% over the past three years (grade of D) and 4.8% per year over the past five years (grade of C) and 8.6% per year over the past 10 years (grade of D).

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