Schwab's Stock-Picking Ideas Take First Place in Barron's Competition for Second Consecutive Year
January 24 2005 - 1:49PM
PR Newswire (US)
Schwab's Stock-Picking Ideas Take First Place in Barron's
Competition for Second Consecutive Year Model Portfolio Based on
Schwab Equity Ratings Delivers a 53% Return Over Three Years SAN
FRANCISCO, Jan. 24 /PRNewswire-FirstCall/ -- A model stock
portfolio constructed by Charles Schwab & Co., Inc. and based
on Schwab Equity Ratings(R), outperformed the S&P 500 Index as
well as all competing brokerages' portfolios in Barron's annual
stock selection competition, as reported in the January 22 issue.
Based on data compiled by Zacks Investment Research, an independent
company that analyzes broker research, Charles Schwab's portfolio
took first place for the three-year period 2002-2004, producing
substantially greater returns than any of the 13 competing
brokerages. For the three-year period ended December 31, 2004,
Schwab's picks returned 53%, compared to the S&P's 11% and the
second place winner's 31%. Schwab took first place in the same
category last year, returning 18.3% for the 2001-2003 period
compared to a 12% drop in the S&P 500. "Schwab Equity Ratings
have once again proven their effectiveness at identifying
high-performing stocks, especially over the long haul," said Greg
Forsythe, senior vice president, Schwab Equity Ratings. "Simple
luck or a well-timed focus on hot sectors can boost a portfolio's
performance in the short term, but taking the Barron's gold twice
for three-year performance -- during periods that included steep
bear and bull markets -- demonstrates the true proficiency of
Schwab's ratings. We are hard at work developing new investment
products that feature a methodology of investing in A- and B- rated
stocks to augment the line-up of Schwab Equity Ratings-powered
products already available." Schwab's clients have access to the
ratings on schwab.com and can use them as a component of their own
research. The ratings are also the basis for the stock
recommendations Schwab provides to Schwab Private Clients and
Schwab Advised Investing clients. Schwab offers seven mutual funds
which rely on Schwab Equity Ratings, all of which have delivered
highly competitive returns in their respective categories. For
example, the Schwab Dividend Equity Fund, designed to take
advantage of the reduced tax on qualified dividend income, returned
nearly 24% since its launch in Sept. 2003. (Standardized
performance for the Schwab Dividend Equity Fund was 16.59% for one
year as of 12-31-04 and 23.86% since inception.) For more
information, go to
http://www.schwab.com/public/schwab/advice_research/schwab_equity_ratings
and http://www.schwab.com/serfunds. About Schwab's Model Portfolio
Schwab's model portfolio consists of 100 of the 1,000 largest
market cap companies in the U.S. In developing the portfolio,
Forsythe conducts a vigorous monthly review of these stocks using
Schwab Equity Ratings' disciplined approach to stock selection,
focusing on fundamentals, valuation, momentum, and risk. Stocks
that no longer meet Schwab's strict criteria are dropped from the
list and replaced by more highly rated stocks. Barron's Brokerage
Scorecard 2002 - 2004 Charles Schwab 53.10% Credit Suisse FB 30.91
Banc of America 29.70 Bear Stearns 27.55 Morgan Stanley 11.74
Raymond James 11.40 Lehman Bros 10.77 Goldman Sachs 9.32 Edward
Jones 8.85 A.G. Edwards 8.68 Smith Barney 5.73 Merrill Lynch 4.63
RBC Dain Rauscher 0.40 Morgan Keegan NA Standard & Poor's 500
11.16 Source: Barron's, Jan. 22, 2005 About Schwab Equity Ratings
Schwab Equity Ratings offer an objective and disciplined assessment
of approximately 3,000 U.S. equities, more than any other major
brokerage firm. Stocks are assigned grades of A, B, C, D, or F,
reflecting performance potential over the next 12 months. Schwab's
outlook is that "A"-rated stocks, on average, will strongly
outperform, and "F"-rated stocks, on average, will strongly
underperform the equities market over the next 12 months. The
ratings assess four broad categories: fundamentals, valuation,
momentum, and risk. They are updated each week to reflect new
financial data and other information. On average, Schwab Equity
Ratings A-rated stocks outperformed the Dow Jones Wilshire 5000
Composite Index in the 52-week period from January 12, 2004 through
January 10, 2005. The average performance of all stocks rated A on
January 12 2004, through the 52 weeks up to January 10, 2005 was
18.56% compared to a return of 8.14% during that period for the
Index. The average performance of all stocks rated F on January 12,
2004 through the 52 weeks to up to January 10, 2005, was -0.11%.
For more information on Schwab Equity Ratings, including
performance details, how performance was calculated, comparison of
performance to benchmarks and limitations of model performance,
visit http://www.schwab.com/serperformance. About Charles Schwab
The Charles Schwab Corporation (NYSE:SCH) Nasdaq, through its
operating subsidiaries, provides securities brokerage and financial
services to individual investors and the independent investment
advisors who work with them. With over 7 million individual
investor accounts and more than $1 trillion in client assets, The
Charles Schwab Corporation is one of the nation's largest financial
services firms. Its subsidiary Charles Schwab & Co., Inc.
(member SIPC) provides a complete range of investment services and
products, including an extensive selection of mutual funds;
financial planning and investment advice; retirement plans;
referrals to independent fee-based investment advisors; and
custodial, operational and trading support for independent
fee-based investment advisors. Its subsidiary Charles Schwab Bank
(member FDIC) provides banking and mortgage services and products.
The corporation's other operating subsidiaries include U.S. Trust
Corporation (member FDIC) and CyberTrader(R), Inc. (member SIPC).
These companies' Web sites can be reached at
http://www.schwab.com/, http://www.schwabbank.com/,
http://www.ustrust.com/, and http://www.cybertrader.com/.
Limitations of Model Performance: For all model performance
results, there are inherent limitations which investors should
understand. Unlike an actual performance record, simulated results
do not represent actual investment performance or trading. Since
the trades have not actually been executed, the results may have
under- or over- compensated for the impact, if any of certain
market factors, such as the effect of limited trading liquidity. No
representation is being made that any investor will or is likely to
achieve results similar to those shown. The results presented
reflect past performance and should not and cannot be viewed as an
indicator of future performance. The results shown are not an
indicator of the returns a Schwab client would have realized or
will realize in relying on Schwab Equity Ratings or any stock list
or model mentioned. Schwab Equity Ratings and the lists or models
mentioned are not personal recommendations for any particular
investor and do not take into account the financial, investment or
other objectives and may not be suitable for any particular
investor. Before buying, investors should consider whether the
investment is suitable for themselves and their portfolio.
Additionally, investors should consider any recent market or
company news. Stocks can be volatile and entail risk and individual
stocks may not be suitable for you. Indexes are unmanaged, do not
incur management fees and expenses and cannot be invested in
directly. Barron's Competition: All hypothetical buy and sell
trades were charged a 1% commission and assumed to take place at
the stock's closing price. Performance of the portfolios submitted
was calculated using an equal-weighted return methodology that is
administered by Zacks; whereas the performance of the S&P
500(R), as noted by Barron's, is stated as the
capitalization-weighted return. The S&P 500 Index represents a
list of 500 leading companies from leading industries. Each
brokerage firm had its own methodologies in picking its stock
lists, which differed in many respects, including the number of
issues held, frequency of trading and changes of selection criteria
over time. Barron's is a registered trademark of Dow Jones &
Company, Inc. All rights reserved. Schwab Equity Ratings Cohort
Performance Schwab creates five cohorts (defined as those stocks
that received the same A, B, C, D or F rating that week). Schwab
calculates the total return for each stock in each A, B, C, D and F
rating cohort assuming a 52 week holding period. All hypothetical
buy and sell trades were assumed to take place at the stock's
closing price. Transaction costs such as brokerage commissions,
fees or other expenses have not been deducted from the total return
calculations. Results would have been lower if such costs were
deducted. Any dividends incurred were treated as non-interest
bearing cash and not reinvested. The 52 week performance for each
Cohort is calculated as the equal weighted average of all the
simple total returns associated with each stock in that Cohort. The
Dow Jones Wilshire 5000 Composite index is a capitalization
weighted index of over 6500 stocks and treats dividends as
reinvested. Performance of a single stock or group of stocks within
a Schwab Equity Ratings model performance cohort can vary greatly
from the performance of that cohort. Investors would not likely be
able to achieve the same performance as that discussed for various
reasons explained in detail on schwab.com. Mutual Funds Past
performance is no indication (or "guarantee") of future results.
Visit schwab.com for month-end performance information. Investment
value will fluctuate, and shares, when redeemed, may be worth more
or less than original cost. Investors should carefully consider
information contained in the prospectus, including investment
objectives, risks, charges and expenses. You can request a
prospectus by calling Schwab at 800-435-4000. Please read the
prospectus carefully before investing. (0005-6533) DATASOURCE:
Charles Schwab CONTACT: Sondra Harris of Charles Schwab,
+1-415-636-3292, or Web site: http://www.schwab.com/
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