Vanguard Health Care Fund (VGHCX)

Vanguard Health Care Fund (VGHCX) is one of the popular sector stock mutual funds. Invest in top Vanguard sector stock fund in your financial account. This investment fund focuses its assets in companies which operate in health care industry.

Vanguard Health Care Fund (Ticker: VGHCX)

The investment objective of Vanguard Health Care fund is to provide long-term capital appreciation. The mutual fund invests majority of its assets (>80%) in the stocks of companies mainly engaged in the development, production, or distribution of products and services related to the health care industry. These companies may include pharmaceutical firms, medical supply companies, and businesses that operate hospitals and other health care facilities. It may invest in companies engaged in medical, diagnostic, biochemical, and other research and development activities. The fund may invest in domestic and foreign stocks.

Fund Profile

• Fund Inception Date: May 22, 1984
• Ticker Symbol: VGHCX
• CUSIP: 921908307
• Beta (3yr): 0.52
• Category: Health
• Distribution/ Yield: 0.88%
• Capital Gains: 0%
• Expense Ratio: 0.37%
• Net Assets: $ 46.4 billion
• Number of Years Up: 22 years
• Number of Years Down: 5 years
• Annual Turnover Rate: 12.00%
• Fund Manager: Jean M. Hynes

Updated May 2017

Since its inception in May 1984, the fund advisor is Wellington Management Company, LLP. As part of Vanguard fund family, it has big total net assets of $23.25 billion. The dividend yield is 1.46%. VGHCX fund has no management fee. It is also a no-load fund therefore it doesn’t charge any front-end sales load fee or deferred sales load fee.  The annual net expense ratio is 0.35%. It is 77% lower than the average expense ratio of funds with similar holdings. The average ratio in the category is 1.49%.

Best Health Sector Stock Mutual Funds 2012

Morningstar ranks this health mutual fund with 4-stars rating. This Vanguard fund has recorded 22 years of positive return and 5 years of negative return since its inception. It has YTD return of 14.40%. The 5-year annualized return is 5.44%. The worst performance year occurred in 2008 with -18.45%. The best was in 2000 with 60.56%. The performance of this fund based on the load adjusted returns is as follows:

• Year 2017: 11.95% (YTD)
• Year 2016: -8.99%
• Year 2015: 12.65%
• Year 2014: 28.52%
• Year 2013: 43.19%
• Year 2012: 15.11%

The benchmarks of this fund are Spliced Health Care Index and Dow Jones US Total Stock Market Index. You can buy this mutual fund from around 89 brokerages. The brokerages are Vanguard NTF, Schwab Retail, T Rowe Price, JP Morgan, E Trade Financial, TD Ameritrade Inc, Firstrade, Royal Alliance, etc. You will need $3,000 minimum initial investment to invest in this fund in regular brokerage account. There is no retirement account (IRA) available. This fund is available as well in Admiral Shares (VGHAX).

The month-end 10 largest holdings as of September 2012 are Merck & Co Inc, UnitedHealth Group Inc, Amgen Inc, Pfizer Inc, Roche Holding AG, Forest Laboratories Inc, Abbott Laboratories, McKesson Corp, Eli Lilly & Co and Astellas Pharma Inc. They equal to 40.2% of the total net assets. The top sector diversifications are Pharmaceuticals (51.40%), Managed Health Care (12.90%), Biotechnology (9.40%) & Health Care Equipment (9.40%).

According to the fund prospectus, the investment risks are industry concentration risk, stock market risk, manager risk, country risk, currency risk, etc.

Disclosure: No Position

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Note: This Vanguard Health Care Fund (VGHCX) is part of Kiplinger's 25 best mutual funds.