Is Vanguard Health Care Admiral (VGHAX) a Strong Mutual Fund Pick Right Now?
If you have been looking for Sector – Health funds, a place to start could be Vanguard Health Care Admiral (VGHAX). VGHAX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
The world of Sector – Health funds is an area filled with options, such as VGHAX. 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
VGHAX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Health Care Admiral made its debut in November of 2001, and since then, VGHAX has accumulated about $43.27 billion in assets, per the most up-to-date date available. The fund is currently managed by Jean M. Hynes who has been in charge of the fund since May of 2008.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 12.88%, 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 6.9%, which places it in the top 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. Compared to the category average of 0%, the standard deviation of VGHAX over the past three years is 13.87%. The standard deviation of the fund over the past 5 years is 14.17% compared to the category average of 31%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.62, which means it is hypothetically less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. Over the past 5 years, the fund has a positive alpha of 2.07. This means that managers in this portfolio are skilled in picking 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, VGHAX is a no load fund. It has an expense ratio of 0.30% compared to the category average of 73%. So, VGHAX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $50,000, investors should also note that each subsequent investment needs to be at least $1.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Vanguard Health Care Admiral ( VGHAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Vanguard Health Care Admiral ( VGHAX ) looks like a good potential 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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