SWLBX Liquidation... what happens to my shares?

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bobf
Posts: 28
Joined: Tue Mar 10, 2015 9:31 pm

SWLBX Liquidation... what happens to my shares?

Postby bobf » 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
Posts: 1258
Joined: Sun Nov 22, 2015 6:50 am

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

Postby 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.
Anybody know why there's a 20-pound frozen turkey up in the light grid?

retiredjg
Posts: 28575
Joined: Thu Jan 10, 2008 12:56 pm

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

Postby 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.


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