PHSTX
Putnam Global Health Care-A
Focused Investment in Healthcare
Putnam Global Health Care-A (PHSTX) is a mutual fund that seeks capital appreciation by investing primarily in the healthcare sector. With a mandate to allocate at least 80% of its assets to healthcare companies, PHSTX offers investors a concentrated exposure to this dynamic and essential industry. The fund’s focus on healthcare allows it to capitalize on the sector’s growth potential, driven by factors such as aging populations, technological advancements, and increased healthcare spending globally. This specialization makes PHSTX an attractive option for investors looking to benefit from the long-term trends in healthcare.
At A Glance
Executive Summary
PHSTX focuses on healthcare stocks, offering sector-specific growth with a 1.07% expense ratio. Top holdings include Eli Lilly and UnitedHealth.
Focused exposure to healthcare sector Strong top holdings like Eli Lilly and UnitedHealth Potential for capital appreciation
High expense ratio compared to peers Negative alpha and Sharpe ratio Limited diversification outside healthcare
Performance Metrics and Volatility
PHSTX has demonstrated a mixed performance over various time frames. The fund’s one-year return stands at 18.43%, which is commendable, although it lags behind its benchmark, the MSCI World DivAdj Index, which returned 31.60% over the same period. The fund’s five-year annualized return is 11.59%, indicating a solid performance over the medium term. However, the fund’s risk metrics reveal some concerns, with a negative alpha of -13.21% and a Sharpe ratio of -1.25, suggesting that the fund has not effectively compensated investors for the risk taken. The fund’s beta of 0.67 indicates lower volatility compared to the market, which may appeal to risk-averse investors.
Top Holdings and Sector Allocation
PHSTX’s portfolio is heavily weighted towards large-cap healthcare companies, with top holdings including Eli Lilly and Co (9.89%), UnitedHealth Group Inc (9.68%), and AbbVie Inc (7.34%). These companies are leaders in their respective fields, providing the fund with a strong foundation in the healthcare sector. The fund’s sector allocation is exclusively in healthcare, which means it does not diversify into other industries. This concentrated approach can lead to higher returns if the healthcare sector performs well, but it also increases the fund’s exposure to sector-specific risks.
Comparative Analysis with Similar Funds
When compared to similar funds, PHSTX presents a unique profile. While its expense ratio of 1.07% is higher than some peers, such as Invesco Income Advantage US-A (SCAUX) with an expense ratio of 0.0116%, PHSTX offers a specialized focus on healthcare, unlike the broader investment strategies of its peers. The fund’s yield of 0.16% is relatively low, especially when compared to funds like BlackRock High Equity Income-InvA (BMEAX), which offers a yield of 6.84%. Investors must weigh the benefits of PHSTX’s sector-specific strategy against its higher costs and lower yield.
Risk and Drawdown Analysis
PHSTX’s risk profile is characterized by a standard deviation of 3.05%, indicating moderate volatility. The fund’s maximum drawdown of -9.0% highlights its potential for significant losses during market downturns, although its beta of 0.67 suggests it is less volatile than the broader market. The fund’s downside risk, measured by the Ulcer Index, is 2.69, which is relatively low, indicating that the fund has managed to limit severe losses. However, the negative Treynor ratio of -19.62 and the fund’s negative alpha suggest that it has not effectively rewarded investors for the risks taken.
Market Capitalization and Asset Allocation
PHSTX’s asset allocation is predominantly in U.S. equities, which make up 73.20% of the portfolio, with non-U.S. equities accounting for 23.32%. The fund’s market capitalization allocation is skewed towards extra-large companies, which constitute 49.36% of the portfolio, followed by large-cap companies at 31.03%. This focus on large and extra-large companies provides stability and potential for growth, as these companies are often leaders in the healthcare sector. The fund’s cash position is relatively low at 3.48%, indicating a strong commitment to equity investments.
Expense Ratio and Cost Considerations
The expense ratio of PHSTX is 1.07%, which is on the higher side compared to some of its peers. This higher cost can impact net returns, especially in a competitive market environment. Investors should consider whether the fund’s specialized focus on healthcare justifies the higher expense ratio. While the fund offers potential for capital appreciation through its concentrated healthcare investments, the cost of maintaining such a focused portfolio can be a deterrent for cost-sensitive investors. It is crucial for investors to weigh the potential benefits of the fund’s strategy against the impact of its expenses on overall returns.
Conclusion: Suitability for Investors
PHSTX stands out for its dedicated focus on the healthcare sector, making it an appealing choice for investors seeking exposure to this industry. The fund’s strong holdings in leading healthcare companies provide a solid foundation for potential growth. However, the fund’s higher expense ratio and mixed performance metrics may not suit all investors. Those with a high risk tolerance and a specific interest in healthcare may find PHSTX a valuable addition to their portfolio. Conversely, investors seeking broader diversification or lower costs might consider alternative options. Ultimately, PHSTX is best suited for those who believe in the long-term growth prospects of the healthcare sector and are willing to accept the associated risks.
Similar Securities
SHSAX: BlackRock Health Sciences Opportunities Fund | Specialized Health Sector Investment
SHSAX focuses on health sciences with 99.89% allocation, offering growth potential but higher risk. Expense ratio is 1.09%.
PHSTX: Putnam Global Health Care-A | Sector-Specific Growth in Healthcare
PHSTX focuses on healthcare stocks, offering sector-specific growth with a 1.07% expense ratio. Top holdings include Eli Lilly and UnitedHealth.
GGHCX: Invesco Health Care-A | Targeted Healthcare Growth Fund
Invesco Health Care-A (GGHCX) offers focused healthcare sector exposure with a 1.06% expense ratio, ideal for growth investors seeking sector-specific opportunities.
JAGLX: Janus Henderson Global Life Sciences-T | Health Sector Growth Fund
JAGLX focuses on health sector growth with top pharma holdings, offering aggressive investors a specialized portfolio with a 0.92% expense ratio.
PRHSX: TRPrice Health Sciences-Inv | Specialized Health Sector Growth Fund
PRHSX offers focused exposure to health sector stocks with a 0.8% expense ratio, ideal for investors seeking specialized growth.
Futher Reading
https://finance.yahoo.com/quote/PHSTX/”>Yahoo: Putnam Global Health Care-A
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