There are plenty of choices in the Sector - Health category, but where should you start your research? Well, one fund that you should consider investigating is Schwab Health Care Fund (SWHFX Quick QuoteSWHFX - Free Report) . SWHFX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes SWHFX as Sector - Health, a segment packed with options. Sector - Health mutual funds offer investors a focus on the healthcare industry, one of the largest sectors in the American economy. These funds can include everything from pharmaceutical companies to medical device manufacturers and for-profit hospitals.

History of Fund/Manager

SWHFX finds itself in the Schwab Funds family, based out of San Francisco, CA. Schwab Health Care Fund made its debut in July of 2000, and since then, SWHFX has accumulated about $859.3 million in assets, per the most up-to-date date available. The fund's current manager, a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 16.06%, and is 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 6.95%, 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. Compared to the category average of 17.16%, the standard deviation of SWHFX over the past three years is 12.63%. The standard deviation of the fund over the past 5 years is 12% compared to the category average of 16.21%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

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, 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.

And for investors concerned about the potential drawdown in a really bad calendar year, we can look back to 2008 for that figure. The fund lost over 24.96% in what was its worst calendar year in a decade.

Nevertheless, with a 5-year beta of 0.97, the fund is likely to be as volatile as 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 positive alpha of 1.47, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is largely on equities that are traded in the United States.

The mutual fund currently has 99.65% of its holdings in stocks, and these companies have an average market capitalization of $118.18 billion. The fund has the heaviest exposure to the following market sectors:

1. Health
2. Industrial Cyclical

With turnover at about 42%, this fund makes more trades in a given year than the average of comparable funds.

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, SWHFX is a no load fund. It has an expense ratio of 0.80% compared to the category average of 1.34%. SWHFX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $100, investors should also note that there is no minimum for each subsequent investment.

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, this fund looks like a somewhat average choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Sector - Health, make sure to go to www.zacks.com/funds/mutual-funds 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.