The Invesco S&P SmallCap Health Care ETF (
PSCH Quick Quote PSCH - Free Report) was launched on 04/07/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Healthcare - Broad segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
The fund is sponsored by Invesco. It has amassed assets over $207.65 million, making it one of the average sized ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. PSCH seeks to match the performance of the S&P SmallCap 600 Capped Health Care Index before fees and expenses.
The S&P SmallCap 600 Capped Health Care Index measures the overall performance of common stocks in the health care sector.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.29%, making it one of the least expensive products in the space.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.
Looking at individual holdings, Ensign Group Inc/the (
ENSG Quick Quote ENSG - Free Report) accounts for about 5.55% of total assets, followed by Merit Medical Systems Inc ( MMSI Quick Quote MMSI - Free Report) and Glaukos Corp ( GKOS Quick Quote GKOS - Free Report) .
The top 10 holdings account for about 33.84% of total assets under management.
Performance and Risk
The ETF has lost about -14.61% so far this year and is down about -18.33% in the last one year (as of 11/23/2023). In that past 52-week period, it has traded between $34.80 and $48.64.
The ETF has a beta of 0.97 and standard deviation of 22.99% for the trailing three-year period, making it a high risk choice in the space. With about 69 holdings, it effectively diversifies company-specific risk.
Invesco S&P SmallCap Health Care ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PSCH is a sufficient option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Health Care ETF (
VHT Quick Quote VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF ( XLV Quick Quote XLV - Free Report) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $16.06 billion in assets, Health Care Select Sector SPDR ETF has $37.83 billion. VHT has an expense ratio of 0.10% and XLV charges 0.10%. Bottom Line
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