If investors are looking at the Sector - Health fund category, make sure to pass over Schwab Health Care Fund (SWHFX Quick QuoteSWHFX - Free Report) . SWHFX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on various 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 is a part of the Schwab Funds family of funds, a company based out of San Francisco, CA. The Schwab Health Care Fund made its debut in June of 2000 and SWHFX has managed to accumulate roughly $635.94 million in assets, as of the most recently available information. 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 carries a 5-year annualized total return of 5.54%, 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 5.68%, 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. The standard deviation of SWHFX over the past three years is 13.67% compared to the category average of 15.6%. The fund's standard deviation over the past 5 years is 14.84% compared to the category average of 16.63%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.65, so investors should note that it is hypothetically less volatile than the market at large. 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. SWHFX has generated a negative alpha over the past five years of -2.83, demonstrating 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 0.80% compared to the category average of 1.12%. Looking at the fund from a cost perspective, SWHFX is actually cheaper than its peers.

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 consideration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively strong performance, average downside risk, and lower fees, Schwab Health Care Fund ( SWHFX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.

Your research on the Sector - Health segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well 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.