Is Vanguard Health Care Admiral (VGHAX) a Strong Mutual Fund Pick Right Now?

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If you’re looking for a Sector – Health fund category, then a potential option is Vanguard Health Care Admiral (VGHAX). VGHAX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Load Error

Objective

We note that VGHAX is a Sector – Health fund, and this area is also loaded with various options. Sector – Health mutual funds give investors an opportunity to focus on one of the largest sectors of the American economy, healthcare. Funds in this category can include everything from for-profit hospitals to pharmaceutical companies and medical device manufacturers.

History of Fund/Manager

Vanguard Group is responsible for VGHAX, and the company is based out of Malvern, PA. Vanguard Health Care Admiral debuted in November of 2001. Since then, VGHAX has accumulated assets of about $44.27 billion, according to the most recently available information. 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 12.74%, and is in the top third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 12.58%, 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. VGHAX’s standard deviation over the past three years is 15.88% compared to the category average of 17.14%. The standard deviation of the fund over the past 5 years is 14.1% compared to the category average of 14.82%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.74, the fund is likely to be less volatile than the market average. 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. VGHAX has generated a negative alpha over the past five years of -0.49, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VGHAX is a no load fund. It has an expense ratio of 0.27% compared to the category average of 1.32%. Looking at the fund from a cost perspective, VGHAX is actually cheaper than its peers.

This fund requires a minimum initial investment of $50,000, and each subsequent investment should be at least $1.

Bottom Line

Overall, Vanguard Health Care Admiral ( VGHAX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

This could just be the start of your research on VGHAXin the Sector – Health category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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.

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