Back to top

Image: Bigstock

Is Vanguard Health Care Investor (VGHCX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Looking for a Sector - Health fund? You may want to consider Vanguard Health Care Investor (VGHCX - Free Report) as a possible option. VGHCX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that VGHCX 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

Vanguard Group is responsible for VGHCX, and the company is based out of Malvern, PA. Vanguard Health Care Investor debuted in May of 1984. Since then, VGHCX has accumulated assets of about $8.33 billion, according to the most recently available information. Jean M. Hynes is the fund's current manager and has held that role since May of 2008.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 8.26%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 11.88%, 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. VGHCX's standard deviation over the past three years is 16.56% compared to the category average of 17.31%. The fund's standard deviation over the past 5 years is 14.95% compared to the category average of 15.6%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VGHCX has a 5-year beta of 0.77, which means it 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 -3.04, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

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, VGHCX is a no load fund. It has an expense ratio of 0.31% compared to the category average of 1.35%. From a cost perspective, VGHCX is actually cheaper than its peers.

This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.

Bottom Line

Overall, Vanguard Health Care Investor ( VGHCX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

Want even more information about VGHCX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Vanguard Health Care Inv (VGHCX) - free report >>

Published in