Is T. Rowe Price Health Sciences (PRHSX) a Strong Mutual Fund Pick Right Now?
Having trouble finding a Sector - Health fund? T. Rowe Price Health Sciences (PRHSX) is a potential starting point. PRHSX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes PRHSX as Sector - Health, a segment packed with options. Sector - Health mutual funds offer investors a focus on the healthcare industry, one of the largest sectors in the American economy. These funds can include everything from pharmaceutical companies to medical device manufacturers and for-profit hospitals.
History of Fund/Manager
T. Rowe Price is based in Baltimore, MD, and is the manager of PRHSX. T. Rowe Price Health Sciences debuted in December of 1995. Since then, PRHSX has accumulated assets of about $13.23 billion, according to the most recently available information. Ziad Bakri is the fund's current manager and has held that role since April of 2016.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 14.3%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 19.36%, 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. Over the past three years, PRHSX's standard deviation comes in at 20.03%, compared to the category average of 17.2%. The standard deviation of the fund over the past 5 years is 18.21% compared to the category average of 15.55%. This makes the fund more volatile than its peers over the past half-decade.
The fund has a 5-year beta of 0.95, so investors should note that it is hypothetically less volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. The fund has produced a positive alpha over the past 5 years of 0.38, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, PRHSX is a no load fund. It has an expense ratio of 0.77% compared to the category average of 1.35%. From a cost perspective, PRHSX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $2,500; each subsequent investment needs to be at least $100.
Overall, T. Rowe Price Health Sciences ( PRHSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.