Any investors hoping to find a Sector - Health fund might consider looking past Schwab Health Care Fund (SWHFX). SWHFX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), 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 $804 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 in particular has delivered a 5-year annualized total return of 13.73%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 12.12%, 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. The standard deviation of SWHFX over the past three years is 11.42% compared to the category average of 17.32%. The standard deviation of the fund over the past 5 years is 11.6% compared to the category average of 16.43%. This makes the fund less volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In the most recent bear market, SWHFX lost 36.2% and outperformed its peer group by 3.32%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.92, which means 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. With a positive alpha of 1.07, 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, SWHFX is a no load fund. It has an expense ratio of 0.79% compared to the category average of 1.31%. So, SWHFX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $100; each subsequent investment has no minimum amount.
Overall, Schwab Health Care Fund ( SWHFX ) has a low 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 somewhat weak choice for investors right now.
Your research on the Sector - Health segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.