There are plenty of choices in the Sector – Health category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Health Care Admiral (VGHAX). VGHAX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Sector – Health funds is an area filled with options, such as VGHAX. Healthcare is one of the biggest sectors of the American economy, and Sector – Health mutual funds provide a great opportunity to invest in this industry. Here, funds can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VGHAX. Vanguard Health Care Admiral debuted in November of 2001. Since then, VGHAX has accumulated assets of about $34.14 billion, according to the most recently available information. The fund’s current manager, Rebecca Sykes, has been in charge of the fund since May of 2023.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 5.47%, and is in the middle 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 8.71%, which places it in the bottom third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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 VGHAX over the past three years is 14.17% compared to the category average of 13.71%. The fund’s standard deviation over the past 5 years is 14.27% compared to the category average of 14.84%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 0.54, the fund is likely to be less volatile than the market average. 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 negative alpha of -2.79, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VGHAX is a no load fund. It has an expense ratio of 0.27% compared to the category average of 1.01%. VGHAX is actually cheaper than its peers when you consider factors like cost.
While the minimum initial investment for the product is $50,000, investors should also note that each subsequent investment needs to be at least $1.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Vanguard Health Care Admiral ( VGHAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Sector – Health area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VGHAX too 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.
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This article originally published on Zacks Investment Research (zacks.com).
