Charles Schwab's Schwab Health Care Fund may not receive a buy rating from Zacks Investment Research's mutual fund rankings, but the research firm said the fund's performance and low cost makes it an appropriate investment for healthcare-focused investors to consider.
The Schwab Health Care Fund (SWHFX) is rated hold by Zacks, but the research firm said it is a fund that investors should consider buying. The fund has $859.3 million in assets under management and has a five-year annualized total return of 16.06%. On a three-year basis, the fund has returned 7.15%, and on a one-year basis, it is up 19.2%, according to Morningstar. Zacks noted that the fund has a standard deviation over the past three years and the past five years of 12.63% and 12%, respectively. That compares to the three-year and five-year category averages of 17.16% and 16.21%, respectively. "The lower the standard deviation, the less volatility the fund experiences," wrote Zacks. "This makes the fund less volatile than its peers over the past half-decade." Charles Schwab Corporation (SCHW) has offered this fund since July 2000. To see more of the firm's services, check out Investopedia's Charles Schwab review.
Zacks said the Schwab Health Care Fund has 99.65% of its holdings in equities, with the companies having an average market capitalization of $118.18 billion. The top holdings in the fund include Johnson & Johnson (JNJ), Amgen Inc. (AMGN), Pfizer Inc. (PFE), Celgene Corporation (CELG), and UnitedHealth Group Incorporated (UNH).
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"Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In the most recent bear market (approximately October 2007-March 2009), SWHFX lost 36.2% and underperformed comparable funds by 3.35%. This could mean that the fund is a worse choice than comparable funds during a bear market," noted Zacks.
As for expenses, Zack's said the Schwab Health Care Fund is less expensive than some of its peers, with an expense ratio of 0.80%. That compares with the category average of 1.34%. With costs becoming a key consideration for all sorts of investors, the cheap nature of this fund and its performance over the past few years could make it an attractive choice for investors. "Overall, Schwab Health Care Fund SWHFX has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now," wrote Zacks.