Does Your Retirement Plan use Index Funds?

Reviewing a recently released analysis from Standard & Poor’s shows that over time, it is very difficult for actively managed mutual funds to beat unmanaged index funds. Therefore, we believe it is critical, that the foundation of your retirement plan be built with low cost index funds.

According to this report, over the previous 15 year time frame, 92% of large-cap funds trailed a low cost S&P 500 index fund. The results for the mid-cap and small-cap universe were even worse, where 95% of mid-cap and 93% of small cap funds trailed their respective index.

What these results are telling you is that you had a 1 in 20 chance of picking a mutual fund that would out pace their respective index.

Charles Schwab Lineup of Index Funds

Charles Schwab and Company has become the main competition in the universe of low cost index funds. Schwab is dedicated to capturing the market in low-fee index funds that are priced to take assets from the competition. Here are 5 of Schwab's best index funds that offer good performance and low expense ratios.

Fund Class Schwab Fidelity Vanguard
S&P 500 Index Fund 0.03% 0.09% 0.04%
Small Cap Index Fund 0.05% 0.17% 0.06%
International Index Fund 0.06% 0.16% 0.11%
Total Bond Index 0.04% 0.14% 0.05%
Source: Schwab. Note: effective October 1, 2017.
*Schwab is a registered trademark of Charles Schwab & Co., Inc. Fundamental Index is a registered trademark of Research Affiliates, LLC. Minimums are subject to change. Investors should consider carefully information contained in the prospectus, or if available, the summary prospectuses, including investment objectives, risks, charges, and expenses. You can view, download, and print a prospectus. 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. The S&P 500 Index is an index of 500 widely traded stocks. It is not an investment product available for purchase. Charles Schwab & Co., Inc. (the distributor of Schwab Funds) and Charles Schwab Investment Management, Inc. (the investment advisor) are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Represents Fidelity Investor class funds and Vanguard Admiral class funds as of 10/1/2017.All investing is subject to risk, including the possible loss of the money you invest. Past performance is no guarantee of future results. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Diversification does not ensure a profit or protect against a loss.

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