Designed to provide broad exposure to the Healthcare - Broad segment of the equity market, the Invesco S&P SmallCap Health Care ETF (PSCH) is a passively managed exchange traded fund launched on 04/07/2010.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $761.43 M, 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.
This Index is comprised of common stocks of U.S. healthcare companies.These are companies that are principally engaged in the business of providing healthcare-related products & services, including biotechnology, pharmaceuticals, medical technology and supplies & facilities and this Index is a subset of the S&P SmallCap 600 Index.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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, Amedisys Inc (AMED) accounts for about 4.39% of total assets, followed by Neogen Corp (NEOG) and Lhc Group Inc (LHCG).
The top 10 holdings account for about 33.46% of total assets under management.
Performance and Risk
The ETF return is roughly 6.48% and it's up approximately 2.14% so far this year and in the past one year (as of 01/30/2019), respectively. PSCH has traded between $100.46 and $144.96 during this last 52-week period.
The ETF has a beta of 1.25 and standard deviation of 18.97% for the trailing three-year period, making it a high risk choice in the space. With about 70 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P SmallCap Health Care ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PSCH is a great option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR Fund (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $8.54 B in assets, Health Care Select Sector SPDR Fund has $18.56 B. VHT has an expense ratio of 0.10% and XLV charges 0.13%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Health Care Select Sector SPDR Fund (XLV): ETF Research Reports
Vanguard Health Care ETF (VHT): ETF Research Reports
Neogen Corporation (NEOG): Free Stock Analysis Report
LHC Group (LHCG): Get Free Report
Amedisys, Inc. (AMED): Free Stock Analysis Report
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Zacks Investment Research