5 Top-Ranked Healthcare Funds Set to Outperform - Mutual Fund Commentary

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The healthcare sector is one of the most desirable avenues for parking investments when markets are headed south. The demand for such services usually remains unchanged even during an economic downturn and investments in the sector provide sufficient protection to the capital invested. Several pharmaceutical companies also provide regular dividends, which can help mitigate losses from falling share prices. Healthcare mutual funds provide the perfect avenue for investors looking to invest in this sector.

Below we will share with you 5 top rated health mutual funds . Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all health funds, investors can click here to see the complete list of funds .

Fidelity Select Health Care (FSPHX) seeks capital growth over the long run. It invests a majority of its assets in companies whose principal operations include production, design and marketing of health care related products or services. The fund focuses on acquiring common stocks and purchases both domestic and foreign securities depending on factors such as financial strength and economic conditions. This non diversified fund returned 44.4% over the last one year period.

The fund has an expense ratio of 0.76% as compared to category average of 1.39%.

Fidelity Select Medical Equipment & Systems (FSMEX) invests a lion's share of its assets in companies that are primarily involved in medical equipment and devices and related technologies sector. The fund invests in both US and non-US companies. This healthcare mutual fund is non-diversified and returned 27.7% over the last one year period.

Edward Yoon is the fund manager and has managed this healthcare mutual fund since 2007.

Fidelity Select Pharmaceuticals (FPHAX) seeks long-term capital growth. It invests heavily in firms all over the globe whose primary operations are related to manufacturing, selling, developing or distributing pharmaceuticals and drugs. The fund invests in the pharma sector taking into consideration the industry position and the financial condition of the issuer. This healthcare mutual fund is non-diversified and returned 32.1% over the last one year period.

As of June 2014, this fund held 89 issues with 6.44% of its assets invested in AbbVie Inc.

ProFunds UltraSector Health Care (HCPSX) invests in equity securities and derivatives that in the opinion of the fund advisors possess daily return characteristics identical to one and a half times the daily return of the Dow Jones U.S. Health Care Index. This healthcare mutual fund is non-diversified and returned 41.2% over the last one year period.

Michael Neches is the fund manager and has managed this healthcare mutual fund since 2013.

Vanguard Health Care Index Admiral (VHCIX) seeks to provide returns identical to that of the MSCI US Investable Market Index (IMI)/Health Care 25/50 index. The fund invests in almost all or all of the stocks which are included in the index. The index includes domestic health care companies. This healthcare mutual fund is non-diversified and returned 28.4% over the last one year period.

As of July 2014, this fund held 312 issues with 10.14% of its assets invested in Johnson & Johnson.

To view the Zacks Rank and past performance of all health mutual funds, investors can click here to see the complete list of funds .

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank in our Mutual Fund Center .


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Mutual Funds


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