There are plenty of choices in the Sector – Health category, but where should you start your research? Well, one fund that might be worth investigating is Schwab Health Care Fund (SWHFX). SWHFX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
We note that SWHFX is a Sector – Health fund, and this area is also loaded with various options. Sector – Health mutual funds give investors an opportunity to focus on one of the largest sectors of the American economy, healthcare. Funds in this category can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.
History of Fund/Manager
Schwab Funds is based in San Francisco, CA, and is the manager of SWHFX. Schwab Health Care Fund made its debut in June of 2000, and since then, SWHFX has accumulated about $746 million in assets, per the most up-to-date date available. A team of investment professionals is the fund’s current manager.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 11.5%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 12.28%, which places it in the top third during this time-frame.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 19.06%, the standard deviation of SWHFX over the past three years is 15.01%. The standard deviation of the fund over the past 5 years is 13.29% compared to the category average of 17.18%. This makes the fund less volatile than its peers over the past half-decade.
Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. SWHFX has a 5-year beta of 0.71, which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. SWHFX’s 5-year performance has produced a negative alpha of -0.09, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, SWHFX is a no load fund. It has an expense ratio of 0.80% compared to the category average of 1.34%. So, SWHFX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.
Overall, Schwab Health Care Fund ( SWHFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Schwab Health Care Fund ( SWHFX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Sector – Health, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.