Direct from the Charles Schwab website,

The Schwab YieldPlus Fund® is designed with your income needs in mind. The fund’s objective is to seek high current income with minimal changes in share price.

I have personally owned the Schwab Yield Plus fund many, many years ago – when I had more faith in financial institutions.  The Schwab representative at the time persuaded me to buy the yield plus   fund because it was safe, and it would return slightly better than the money market fund for any residual cash.  Luckily, I closed my Schwab account and the Yield Plus garbage that was part of it years ahead of the financial crisis of 2008.


How is the Schwab Yield “Plus” doing today?  Take a look for yourself.

The Schwab Yield Plus did so well this year (sarcasm!) that there is now a class action lawsuit against Schwab.  From the link,

Specifically, the complaint claims Charles Schwab Corporation headquartered in San Francisco, CA, the funds’ underwriter, investment advisers and officers and directors issued untrue statements regarding the lack of diversification of these funds and the extent of investments assigned to sub-prime mortgage backed and related securities.

The investors in yield plus were not complaining due to losses alone, but due to the misrepresentation regarding the fund holdings.  Apparently Schwab also agreed, because according to this link, they did offer small settlement payouts to the fund holders.

Warning to investors – be careful of any bond fund offering both safety and “extra” income!  That combination does not exist.

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