Should You Invest in the Invesco S&P SmallCap Health Care ETF (PSCH)?
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.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways 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 6, placing it in top 38%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $234.48 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.
The S&P SmallCap 600 Capped Health Care Index measures the overall performance of common stocks in the health care sector.
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
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, Ensign Group Inc/the (ENSG) accounts for about 5.34% of total assets, followed by Merit Medical Systems Inc (MMSI) and Glaukos Corp (GKOS).
The top 10 holdings account for about 33.61% of total assets under management.
Performance and Risk
So far this year, PSCH has lost about -11.56%, and is down about -16.09% in the last one year (as of 09/19/2023). During this past 52-week period, the fund has traded between $38.91 and $48.64.
The ETF has a beta of 0.98 and standard deviation of 22.98% for the trailing three-year period, making it a high risk choice in the space. With about 76 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 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 reasonable 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 $16.75 billion in assets, Health Care Select Sector SPDR ETF has $39.32 billion. VHT has an expense ratio of 0.10% and XLV charges 0.10%.
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 S&P SmallCap Health Care ETF (PSCH): ETF Research Reports
Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
Health Care Select Sector SPDR ETF (XLV): ETF Research Reports
Vanguard Health Care ETF (VHT): ETF Research Reports
The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report
Glaukos Corporation (GKOS) : Free Stock Analysis Report
