If you're looking for a Sector - Health fund category, then a potential option is Schwab Health Care Fund (SWHFX). SWHFX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

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 $732.53 million in assets, per the most up-to-date date available. Wei Li is the fund's current manager and has held that role since June of 2013.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 9.66%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 4.5%, which places it in the middle 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. Over the past three years, SWHFX's standard deviation comes in at 14.45%, compared to the category average of 16.3%. The fund's standard deviation over the past 5 years is 15.09% compared to the category average of 17.84%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.66, the fund is likely to be less volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a negative alpha over the past 5 years of -1.88, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, SWHFX is a no load fund. It has an expense ratio of 0.79% compared to the category average of 1.11%. So, SWHFX is actually cheaper than its peers from a cost perspective.

While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

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, Schwab Health Care Fund ( SWHFX ) looks like a somewhat average 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 SWHFX 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).

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