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Should You Invest in the Invesco S&P SmallCap Health Care ETF (PSCH)?

Launched on 04/07/2010, the Invesco S&P SmallCap Health Care ETF (PSCH) is a passively managed exchange traded fund designed to provide a broad exposure to the Healthcare - Broad segment of the equity market.

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 12, placing it in bottom 25%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $410.04 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.

The S&P SmallCap 600 Capped Health Care Index measures the overall performance of common stocks in the health care sector.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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, Omnicell Inc (OMCL) accounts for about 5.93% of total assets, followed by Neogenomics Inc (NEO) and Amn Healthcare Services Inc (AMN).

The top 10 holdings account for about 32.35% of total assets under management.

Performance and Risk

The ETF has lost about -11.28% and is down about -13.67% so far this year and in the past one year (as of 03/01/2022), respectively. PSCH has traded between $149.24 and $198.17 during this last 52-week period.

The ETF has a beta of 1.08 and standard deviation of 28.02% for the trailing three-year period, making it a high risk choice in the space. With about 81 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 sufficient 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 $16.36 billion in assets, Health Care Select Sector SPDR ETF has $33.48 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
 
Omnicell, Inc. (OMCL): Free Stock Analysis Report
 
AMN Healthcare Services Inc (AMN): 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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