Top-Rated Schwab Funds

It has similar sector and geographic allocations to the Schwab International Index fund and has the highest year-to-date return in our list. However a negative is the much higher expense ratio of 1.57%. This suggests that Laudus may be more actively managed, in which case a higher fee is to be expected. Investors are paying for the extra return from this fund which seems justified given its performance figures.

Both the Laudus and the Schwab International Index funds are diversified in terms of geography, sector and a large number of holdings that make them suitable for risk-averse investors. Please note, however, that international investing carries its own risks.

(SWHFX Quote)Schwab Health Care Focus (SWHFX): We first wrote about the Schwab Health Care Fund back in September of 2006, and this fund continues to perform despite the naysayers and their political concerns in regards to the Democratic control of Congress and the potential adverse consequences for the pharmaceutical industry, in which this fund allocates 43% of its assets. Other sector allocations for the fund include health care products (18%), health care services (12%), electronics (8%), biotechnology (6%) and commercial services (5%).

In terms of performance, this fund compares very well over all time periods displayed in the table, especially its one-month performance, which leads its peers. The fund has a low expense ratio of 0.84%.

The fund invests 100% of assets in U.S. companies that have a significant international presence, such as Pfizer (PFE Quote)(PFE Quote), Johnson & Johnson (JNJ Quote), Merck (MRK Quote) and Schering-Plough (SGP Quote). This strategy is a similar theme to the Dow's on-going success, as large multinationals benefit from higher growth rates overseas, as well as any devaluation of the dollar.

(SWANX Quote)Schwab Core Equity (SWANX): An alternative U.S. domestic play is the Core Equity fund, which differs in its sector allocations from Schwab Health Care, but still carries some big multinational companies in its top 10 holdings.

This fund allocates to the following sectors: computers (12%), insurance (11%), aerospace/defense (10%), pharmaceuticals (9%) and oil & gas (5%). The top 10 holdings is a "who's who" of U.S. multinational companies, including IBM (IBM Quote), Hewlett Packard (HP Quote), Boeing (BA Quote), Exxon Mobil (XOM Quote), Lockheed Martin (LMT Quote), MetLife (MET Quote) and J.P. Morgan Chase (JPM Quote).

The performance of this fund is very competitive over all time periods shown and is a good way to play the U.S. market -- i.e., stick to large-cap multinational names. The fund has a low expense ratio of 0.75%.

Top-Rated Schwab Mutual Funds
Fund Name (ticker)	TheStreet.com Rating Grade	1-Month Return	3-Month Return	Year-To-Date-Return
Schwab International Index Inv (SWINX)	A-	1.95	5.03	9.27
Laudus Internatl MarketMasters Inv (SWOIX)	B+	2.17	6.85	12.2
Schwab Dividend Eqty Fund Inv (SWDIX)	B+	3.38	4.78	8.32
Schwab Health Care Focus (SWHFX)	B	6.22	5.81	11.57
Schwab MarketTrack All Equity Port (SWEGX)	B	3.6	4.19	7.36
Schwab Core Equity Fd (SWANX)	B-	4.95	4.17	8.19
Schwab Total Stock Market Sel (SWTSX)	B-	3.97	3.3	6.89
Source: TheStreet.com Ratings