If investors are looking at the Sector - Health fund category, Vanguard Health Care Admiral (VGHAX) could be a potential option. VGHAX carries 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

Vanguard Group is based in Malvern, PA, and is the manager of VGHAX. Vanguard Health Care Admiral made its debut in November of 2001, and since then, VGHAX has accumulated about $39.75 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

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 9.41%, and it sits in the middle 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 7.95%, 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 15.77%, the standard deviation of VGHAX over the past three years is 13.75%. Looking at the past 5 years, the fund's standard deviation is 14.54% compared to the category average of 16.51%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VGHAX has a 5-year beta of 0.62, which means it 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. With a negative alpha of -0.29, 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, VGHAX is a no load fund. It has an expense ratio of 0.31% compared to the category average of 1.04%. From a cost perspective, VGHAX is actually cheaper than its peers.

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 similar performance, average downside risk, and lower fees, Vanguard Health Care Admiral ( VGHAX ) looks like a good potential 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. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.

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