Should You Invest in the Invesco SP SmallCap Health Care ETF (PSCH)?
If you're interested in broad exposure to the Healthcare - Broad segment of the equity market, look no further than the Invesco SP SmallCap Health Care ETF (PSCH), a passively managed exchange traded fund launched on 04/07/2010.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $360.04 million, 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
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that 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, Momenta Pharmaceuticals Inc (MNTA) accounts for about 6.89% of total assets, followed by Neogenomics Inc (NEO) and Neogen Corp (NEOG).
The top 10 holdings account for about 37.78% of total assets under management.
Performance and Risk
The ETF has lost about -3.92% and it's up approximately 5.83% so far this year and in the past one year (as of 09/24/2020), respectively. PSCH has traded between $88.57 and $138.15 during this last 52-week period.
The ETF has a beta of 1.17 and standard deviation of 27.79% for the trailing three-year period, making it a high risk choice in the space. With about 74 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco SP SmallCap Health Care ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PSCH is a good option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $11.12 billion in assets, Health Care Select Sector SPDR ETF has $23.12 billion. 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.
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Invesco SP SmallCap Health Care ETF (PSCH): ETF Research Reports
Momenta Pharmaceuticals, Inc. (MNTA) : Free Stock Analysis Report
Neogen Corporation (NEOG) : Free Stock Analysis Report
NeoGenomics, Inc. (NEO) : Free Stock Analysis Report
Health Care Select Sector SPDR ETF (XLV): ETF Research Reports
Vanguard Health Care ETF (VHT): ETF Research Reports
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