Charles Schwab index funds were founded in 1991 by Charles Schwab. It aims to give all investors a simple way to follow the growth of big and leading companies in America. The index also encourages the investors to take parts in the growth potential. Therefore, the economy growth will be more dynamic and active.
At the first development, Charles Schwab index funds had to struggle to provide companies performance record. Charles Schwab, the founder and the chairman of the index funds, wanted to build a credible index which conveys a deep understanding on how the markets were growing and then predict the outcome confidently. He also believes the Charles Schwab index funds are able to capture a larger picture of growing companies which are spread across the nation.
Charles Schwab index funds history gives us a glimpse of confident throughout its twenty-six years old performance. Many investors make a clumsy decision by chasing returns when markets look raising and leave them when things seem to be decreasing and cannot be relied on. In this situation, Charles Schwab index funds try to help investors building strategies to avoid such emotional action that sometimes is clouding investors’ prejudice during the decision-making phase. The index later on will help investors choose the right choices and disciplined steps which can help investors make their long-term goals become true.
Comparisons to Other Index Systems
Other than Charles Schwab index funds, there are other way to track the company index such as Dow Jones Industrial Average (DJIA) and the S&P 500 index. However, both index funds have limitations in their performances.
The S&P 500 index records 500 largest companies in the continent. However, the companies are not enlisted here by specific selection. They are included into the S&P 500 index because simply they are the largest companies. Meanwhile, DJIA only covers about 30 companies which certainly is not an exact representation of the economy growth. Charles Schwab index funds, on the other hand, offer the investors the index of 1000 companies. In fact, some companies which are not enlisted in DJIA and S&P 500 are surprisingly emerging on the Schwab 1000 index.
Charles Schwab index will not neglect the reality that some new born companies have a great developing movement which should be appreciated. Therefore, some young companies appear on the index list and they perform a rapid growth which is beyond impressive. This is one ultimate benefit of Charles Schwab Index: investors are allowed to dig in hidden gems for their future investment. The real example in this case is Netflix. Netflix join the Schwab list in 2008 and during the time it has annualized rate above 103%. Meanwhile, S&P 500 added Netflix in near 2010 and the rates grown at 32%. It’s still amazing – but not as good as the growth in the prior time in Schwab index.
Running for more than 26 years old, the Charles Schwab index funds has proved their professionalism and commitment of delivering strong result of multiple companies track records.