SWLBX Liquidation... what happens to my shares?

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vtBob
Posts: 48
Joined: Tue Mar 10, 2015 9:31 pm

SWLBX Liquidation... what happens to my shares?

Post by vtBob » Thu Apr 20, 2017 8:33 am

Hi All,

According to this press release http://www.businesswire.com/news/home/2 ... date-Funds
and according to this article: http://www.barrons.com/articles/cue-the ... 1492634379
Schwab is making " a change regarding its planned reorganization of the Schwab Short-Term Bond Market Fund™ into the Schwab® Short-Term Bond Index Fund and the Schwab Total Bond Market Fund™ into the Schwab® U.S. Aggregate Bond Index Fund, and approved the liquidation of both the Schwab Short-Term Bond Market Fund and Schwab Total Bond Market Fund (the “Funds”)."

I use this fund as part of a three fund portfolio and I prefer mutual funds to ETF for personal reasons.

My base questions are two fold
1. Will my shares automatically convert into Schwab US Aggregate Bond Index Fund (ie no tax consequences)
2. Is this a good replacement for SWLBX in a 3 fund portfolio and if not what would you recommend (preferably something I can buy commission free at schwab.

Thanks in advance!

-Bob

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oldcomputerguy
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Location: In the middle of five acres of woods

Re: SWLBX Liquidation... what happens to my shares?

Post by oldcomputerguy » Thu Apr 20, 2017 8:55 am

bobf wrote:Hi All,

According to this press release http://www.businesswire.com/news/home/2 ... date-Funds
and according to this article: http://www.barrons.com/articles/cue-the ... 1492634379
Schwab is making " a change regarding its planned reorganization of the Schwab Short-Term Bond Market Fund™ into the Schwab® Short-Term Bond Index Fund and the Schwab Total Bond Market Fund™ into the Schwab® U.S. Aggregate Bond Index Fund, and approved the liquidation of both the Schwab Short-Term Bond Market Fund and Schwab Total Bond Market Fund (the “Funds”)."

I use this fund as part of a three fund portfolio and I prefer mutual funds to ETF for personal reasons.

My base questions are two fold
1. Will my shares automatically convert into Schwab US Aggregate Bond Index Fund (ie no tax consequences)
I don't think so. According to the linked press release:
The Funds were closed to new investors on February 22, 2017, and will be closed to all purchases and exchanges as of August 16, 2017. Both Funds will redeem their outstanding shares on or about August 18, 2017 and distribute proceeds to shareholders.
So it looks like you're going to get your invested money back. If these shares are in a taxable account, and there are gains since you purchased, this will be a taxable event.
2. Is this a good replacement for SWLBX in a 3 fund portfolio and if not what would you recommend (preferably something I can buy commission free at schwab.

Thanks in advance!

-Bob
Just looking at the titles of the funds, and the fact that they seem to be moving to similarly-composed index funds, I would guess that they'd be good choices for an investment portfolio. Without seeing details such as ER, it's difficult to say for sure.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

retiredjg
Posts: 32129
Joined: Thu Jan 10, 2008 12:56 pm

Re: SWLBX Liquidation... what happens to my shares?

Post by retiredjg » Thu Apr 20, 2017 9:03 am

bobf wrote:2. Is this a good replacement for SWLBX in a 3 fund portfolio...?
Yes. The fund you had was not the index fund suggested for the 3 fund portfolio (although a lot of people thought it was because of the name). It bobbled quite a bit in the last market crash. The new fund is the proper fund to use when one is available.

turnturnturn
Posts: 26
Joined: Mon Feb 16, 2015 4:18 pm

Re: SWLBX Liquidation... what happens to my shares?

Post by turnturnturn » Mon Aug 28, 2017 4:00 pm

bobf wrote:
Thu Apr 20, 2017 8:33 am
Hi All,

According to this press release http://www.businesswire.com/news/home/2 ... date-Funds
and according to this article: http://www.barrons.com/articles/cue-the ... 1492634379
Schwab is making " a change regarding its planned reorganization of the Schwab Short-Term Bond Market Fund™ into the Schwab® Short-Term Bond Index Fund and the Schwab Total Bond Market Fund™ into the Schwab® U.S. Aggregate Bond Index Fund, and approved the liquidation of both the Schwab Short-Term Bond Market Fund and Schwab Total Bond Market Fund (the “Funds”)."

I use this fund as part of a three fund portfolio and I prefer mutual funds to ETF for personal reasons.

My base questions are two fold
1. Will my shares automatically convert into Schwab US Aggregate Bond Index Fund (ie no tax consequences)
2. Is this a good replacement for SWLBX in a 3 fund portfolio and if not what would you recommend (preferably something I can buy commission free at schwab.

Thanks in advance!

-Bob
Bob,

Just curious, did you get any notification from Schwab about the liquidation, or did you learn about it from the press release and news articles? I'm asking because I only found out about the liquidation (Short-Term Bond Market Fund [SWBDX] in my case) when I received the sell confirmation. I don't remember receiving any prior notification, but I probably just missed the email from Schwab. Or did they drop the ball on this one?

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ruralavalon
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Location: Illinois

Re: SWLBX Liquidation... what happens to my shares?

Post by ruralavalon » Mon Aug 28, 2017 6:59 pm

Schwab U.S. Aggregate Bond Index Fund (SWAGX) ER 0.04% is a very good choice for a three-fund portfolio, better than Schwab Total Bond Market Fund (SWLBX) was.

Schwab U.S. Aggregate Bond Index Fund (SWAGX) tracks the Bloomberg Barclays U.S. Aggregate Bond Index.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

vtBob
Posts: 48
Joined: Tue Mar 10, 2015 9:31 pm

Re: SWLBX Liquidation... what happens to my shares?

Post by vtBob » Tue Aug 29, 2017 1:01 pm

turnturnturn wrote:
Mon Aug 28, 2017 4:00 pm
bobf wrote:
Thu Apr 20, 2017 8:33 am
Hi All,

According to this press release http://www.businesswire.com/news/home/2 ... date-Funds
and according to this article: http://www.barrons.com/articles/cue-the ... 1492634379
Schwab is making " a change regarding its planned reorganization of the Schwab Short-Term Bond Market Fund™ into the Schwab® Short-Term Bond Index Fund and the Schwab Total Bond Market Fund™ into the Schwab® U.S. Aggregate Bond Index Fund, and approved the liquidation of both the Schwab Short-Term Bond Market Fund and Schwab Total Bond Market Fund (the “Funds”)."

I use this fund as part of a three fund portfolio and I prefer mutual funds to ETF for personal reasons.

My base questions are two fold
1. Will my shares automatically convert into Schwab US Aggregate Bond Index Fund (ie no tax consequences)
2. Is this a good replacement for SWLBX in a 3 fund portfolio and if not what would you recommend (preferably something I can buy commission free at schwab.

Thanks in advance!

-Bob
Bob,

Just curious, did you get any notification from Schwab about the liquidation, or did you learn about it from the press release and news articles? I'm asking because I only found out about the liquidation (Short-Term Bond Market Fund [SWBDX] in my case) when I received the sell confirmation. I don't remember receiving any prior notification, but I probably just missed the email from Schwab. Or did they drop the ball on this one?
I'm 99% sure I learned about it from some news source, but I can't honestly say for sure....

I did pretty quickly after switch to swagx on the recommendation of the folks here and have been happy with it thus far.

investordad
Posts: 45
Joined: Sat Feb 11, 2017 1:47 pm

Re: SWLBX Liquidation... what happens to my shares?

Post by investordad » Wed Feb 14, 2018 4:59 pm

ruralavalon wrote:
Mon Aug 28, 2017 6:59 pm
Schwab U.S. Aggregate Bond Index Fund (SWAGX) ER 0.04% is a very good choice for a three-fund portfolio, better than Schwab Total Bond Market Fund (SWLBX) was.

Schwab U.S. Aggregate Bond Index Fund (SWAGX) tracks the Bloomberg Barclays U.S. Aggregate Bond Index.
Is that good? I dont like that i have no history to look at. I have been in that fund for almost a year and i dont know if i should be in vanguard instead.

retiredjg
Posts: 32129
Joined: Thu Jan 10, 2008 12:56 pm

Re: SWLBX Liquidation... what happens to my shares?

Post by retiredjg » Wed Feb 14, 2018 5:53 pm

It's a new fund so there probably is little history. There should be little difference between the Schwab fund and the Vanguard fund in the long run. It's an index fund and Schwab knows how to do that properly. So absent some incredible mess by an excellent brokerage like Schwab....there should not be a problem.

They did have a problem with the previous fund. People thought it was an index fund (name confusion) and when it took a dive in the 2008 unpleasantness, some people thought that Schwab had mismanaged it. In truth, it was an actively managed fund and it did what actively managed funds sometimes do.

If you had easy access to the Vanguard fund and think you might prefer it, how did you end up in the Schwab fund?

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