Is T. Rowe Price Health Sciences (PRHSX) a Strong Mutual Fund Pick Right Now?
Sector - Health fund seekers should consider taking a look at T. Rowe Price Health Sciences (PRHSX). PRHSX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Sector - Health funds is an area filled with options, such as PRHSX. 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
T. Rowe Price is based in Baltimore, MD, and is the manager of PRHSX. Since T. Rowe Price Health Sciences made its debut in December of 1995, PRHSX has garnered more than $10.67 billion in assets. The fund is currently managed by Ziad Bakri who has been in charge of the fund since April of 2016.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 12.94%, and is in the top 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 14.22%, 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. PRHSX's standard deviation over the past three years is 17.02% compared to the category average of 13.24%. Looking at the past 5 years, the fund's standard deviation is 17.04% compared to the category average of 13.55%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In the most recent bear market, PRHSX lost 35.67% and underperformed comparable funds by 3%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Nevertheless, with a 5-year beta of 1.07, the fund is likely to be more volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. The fund has produced a positive alpha over the past 5 years of 2.1, which shows that managers in this portfolio are skilled in picking 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, PRHSX is a no load fund. It has an expense ratio of 0.77% compared to the category average of 1.28%. Looking at the fund from a cost perspective, PRHSX is actually cheaper than its peers.
While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $100.
Bottom Line
Overall, T. Rowe Price Health Sciences ( PRHSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Sector - Health area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PRHSX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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