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Should You Invest in the PowerShares S&P SmallCap Health Care Portfolio (PSCH)?


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The PowerShares S&P SmallCap Health Care Portfolio (PSCH) was launched on 04/07/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Healthcare - Broad segment of the U.S. equity market.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Invesco Powershares. It has amassed assets over $439.31 M, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Broad segment of the U.S. equity market. PSCH seeks to match the performance of the S&P SmallCap 600 Capped Health Care Index before fees and expenses.

This Index is comprised of common stocks of U.S. healthcare companies.These are companies that are principally engaged in the business of providing healthcare-related products & services, including biotechnology, pharmaceuticals, medical technology and supplies & facilities and this Index is a subset of the S&P SmallCap 600 Index.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.29%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.

Looking at individual holdings, Chemed Corp (CHE) accounts for about 4.61% of total assets, followed by Haemonetics Corp (HAE) and Integra Lifesciences Holdings Corp (IART).

The top 10 holdings account for about 33.04% of total assets under management.

Performance and Risk

So far this year, PSCH return is roughly 18.91%, and it's up approximately 48.64% in the last one year (as of 04/18/2018). During this past 52-week period, the fund has traded between $78.85 and $117.15.

The ETF has a beta of 1.01 and standard deviation of 19.53% for the trailing three-year period, making it a high risk choice in the space. With about 75 holdings, it effectively diversifies company-specific risk.

Alternatives

PowerShares S&P SmallCap Health Care Portfolio holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PSCH is an excellent option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR Fund (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $7.25 B in assets, Health Care Select Sector SPDR Fund has $15.52 B. VHT has an expense ratio of 0.10% and XLV charges 0.13%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center .


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SPDR-HLTH CR (XLV): ETF Research Reports

VIPERS-HLTH CR (VHT): ETF Research Reports

PWRSH-SP SC HCP (PSCH): ETF Research Reports

Haemonetics Corporation (HAE): Free Stock Analysis Report

Integra LifeSciences Holdings Corporation (IART): Free Stock Analysis Report

Chemed Corporation (CHE): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
Referenced Symbols: XLV , VHT , PSCH , HAE , IART



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