Technology

Should You Invest in the Invesco S&P SmallCap Health Care ETF (PSCH)?

The Invesco S&P SmallCap Health Care ETF (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 equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Investor-friendly, sector ETFs provide many options 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 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $503.10 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Broad segment of the 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

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

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

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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, Omnicell Inc (OMCL) accounts for about 4.86% of total assets, followed by Neogenomics Inc (NEO) and Ensign Group Inc/the (ENSG).

The top 10 holdings account for about 33.48% of total assets under management.

Performance and Risk

The ETF has added roughly 6.22% and it's up approximately 52.20% so far this year and in the past one year (as of 05/19/2021), respectively. PSCH has traded between $112.77 and $197.88 during this last 52-week period.

The ETF has a beta of 1.14 and standard deviation of 28.28% for the trailing three-year period, making it a high risk choice in the space. With about 74 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P SmallCap Health Care ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PSCH is a good option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $14.48 billion in assets, Health Care Select Sector SPDR ETF has $27.38 billion. VHT has an expense ratio of 0.10% and XLV charges 0.12%.

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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
INVS-SP SC HCP (PSCH): ETF Research Reports
 
Omnicell, Inc. (OMCL): Free Stock Analysis Report
 
NeoGenomics, Inc. (NEO): Free Stock Analysis Report
 
The Ensign Group, Inc. (ENSG): Free Stock Analysis Report
 
SPDR-HLTH CR (XLV): ETF Research Reports
 
VIPERS-HLTH CR (VHT): ETF Research Reports
 
To read this article on Zacks.com click here.

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

Latest Technology Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More