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Is BlackRock Health Sciences Opportunities A (SHSAX) a Strong Mutual Fund Pick Right Now?

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Looking for a Sector - Health fund? You may want to consider BlackRock Health Sciences Opportunities A (SHSAX - Free Report) as a possible option. SHSAX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Sector - Health funds is an area filled with options, such as SHSAX. Healthcare is one of the biggest sectors of the American economy, and Sector - Health mutual funds provide a great opportunity to invest in this industry. Here, funds can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.

History of Fund/Manager

BlackRock is based in New York, NY, and is the manager of SHSAX. BlackRock Health Sciences Opportunities A made its debut in October of 2002, and since then, SHSAX has accumulated about $2.69 billion in assets, per the most up-to-date date available. Erin Xie is the fund's current manager and has held that role since July of 2003.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 19.2%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 10.74%, 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. SHSAX's standard deviation over the past three years is 14.27% compared to the category average of 10.45%. The fund's standard deviation over the past 5 years is 13.39% compared to the category average of 10.05%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. SHSAX lost 26.57% in the most recent bear market and outperformed its peer group by 6.3%. This means that the fund could possibly be a better choice than its peers during a down market environment.

Nevertheless, with a 5-year beta of 0.98, 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. Over the past 5 years, the fund has a positive alpha of 3.67. This means that managers in this portfolio are skilled in picking 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, SHSAX is a load fund. It has an expense ratio of 1.17% compared to the category average of 1.13%. Looking at the fund from a cost perspective, SHSAX is actually more expensive than its peers.

Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $50.

Bottom Line

Overall, BlackRock Health Sciences Opportunities A has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, BlackRock Health Sciences Opportunities A 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. 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.


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