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The U.S. healthcare space has been through ample transformation due to the COVID-19 crisis. From telehealth to robotics, healthcare providers across the United States knew that change had to happen, not only to provide faster response to the pandemic but also for the safety of healthcare workers. According to Mary Edwards of NTT Data Services, demand for virtual care went up to 40-50%, due to the pandemic from around 10% before the pandemic.
The healthcare space received significant boost from advancement in telehealth. The pandemic has led to increase in acute stress and depressive symptoms among people as death cases piled up. Hence, demand for mental and behavioral services was significantly higher, leading to a rise in demand for mental health platforms focused on psychotherapy. This in turn attracted funding from mental healthcare providers. For instance, Lyra, mental healthcare benefits startup that currently addresses more than 1 million people raised $110 million in August, bringing the total valuation of the company above $1 billion.
This transformation that includes virtual care and inclusion of robotic aids along with ongoing research on drug and vaccine for coronavirus has brought in huge transactions in the healthcare industry. In fact, despite the challenges faced by the broader market due to the pandemic, the healthcare sector produced significant outcomes in the first nine months of 2020.
In the third quarter of 2020, Edgemont Partners, a premier healthcare investment bank, reports eight signed and closed mergers and acquisitions (M&A) transactions. One of the M&A deals worth mentioning is of Teladoc's $18.5 billion acquisition of chronic care player Livongo in August. Additionally, Sanofi also spent $3.68 billion to takeover U.S.-based pharmaceutical firm Principia Biopharma Inc. Additionally, digital health funding is all time high as the pandemic has spurred investor interest in the space. CB Insights estimated digital health companies may have raised $8 billion by the end of third quarter.
Healthcare also emerged as the most-active sector for IPO activity in the third quarter. GoodRx Holdings Inc. that operates as a telemedicine site and online marketplace for discounts on prescription drugs debuted on NYSE on Sep 22 raised $1.14 billion. Amwell, a telehealth company raised $742 million after it went public on Sep 16, the company has seen surge in business activities as the pandemic drives huge demand for remote care services.
4 Best Funds to Buy
Given such a bullish scenario, we have highlighted four healthcare mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to grow further. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Health Care Portfolio (FSPHX - Free Report) fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of companies principally engaged in the design, manufacture or sale of products or services used for or in connection with health care or medicine.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned nearly 17% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPHX has an annual expense ratio of 0.70%, which is below the category average of 1.26%.
Fidelity Select BiotechnologyPortfolio (FBIOX - Free Report) fund aims for capital appreciation. This non-diversified fund invests the majority of its net assets in common stocks of companies mostly engaged in the research, development and distribution of biotechnological products.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 10.2% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FBIOX has an annual expense ratio of 0.72%, which is below the category average of 1.26%.
PGIM Jennison Health Sciences Fund- Class Z (PHSZX - Free Report) aims for long-term capital appreciation. This non-diversified fund invests the majority of its assets in securities of companies that function within the healthcare sector, such as pharmaceutical companies, biotechnology companies, medical device manufacturers, healthcare service.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 11.9% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PHSZX has an annual expense ratio of 0.86%, which is below the category average of 1.26%.
T. Rowe Price Health Sciences Fund (PRHSX - Free Report) aims for long-term capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of large- and mid-capitalization companies mostly engaged in research, production and distribution of products and services in the healthcare-related industry.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 14.8% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRHSX has an annual expense ratio of 0.76%, which is below the category average of 1.26%.
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Buy These 4 Best Healthcare Funds From Q3
The U.S. healthcare space has been through ample transformation due to the COVID-19 crisis. From telehealth to robotics, healthcare providers across the United States knew that change had to happen, not only to provide faster response to the pandemic but also for the safety of healthcare workers. According to Mary Edwards of NTT Data Services, demand for virtual care went up to 40-50%, due to the pandemic from around 10% before the pandemic.
The healthcare space received significant boost from advancement in telehealth. The pandemic has led to increase in acute stress and depressive symptoms among people as death cases piled up. Hence, demand for mental and behavioral services was significantly higher, leading to a rise in demand for mental health platforms focused on psychotherapy. This in turn attracted funding from mental healthcare providers. For instance, Lyra, mental healthcare benefits startup that currently addresses more than 1 million people raised $110 million in August, bringing the total valuation of the company above $1 billion.
This transformation that includes virtual care and inclusion of robotic aids along with ongoing research on drug and vaccine for coronavirus has brought in huge transactions in the healthcare industry. In fact, despite the challenges faced by the broader market due to the pandemic, the healthcare sector produced significant outcomes in the first nine months of 2020.
In the third quarter of 2020, Edgemont Partners, a premier healthcare investment bank, reports eight signed and closed mergers and acquisitions (M&A) transactions. One of the M&A deals worth mentioning is of Teladoc's $18.5 billion acquisition of chronic care player Livongo in August. Additionally, Sanofi also spent $3.68 billion to takeover U.S.-based pharmaceutical firm Principia Biopharma Inc. Additionally, digital health funding is all time high as the pandemic has spurred investor interest in the space. CB Insights estimated digital health companies may have raised $8 billion by the end of third quarter.
Healthcare also emerged as the most-active sector for IPO activity in the third quarter. GoodRx Holdings Inc. that operates as a telemedicine site and online marketplace for discounts on prescription drugs debuted on NYSE on Sep 22 raised $1.14 billion. Amwell, a telehealth company raised $742 million after it went public on Sep 16, the company has seen surge in business activities as the pandemic drives huge demand for remote care services.
4 Best Funds to Buy
Given such a bullish scenario, we have highlighted four healthcare mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to grow further. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Fidelity Select Health Care Portfolio (FSPHX - Free Report) fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of companies principally engaged in the design, manufacture or sale of products or services used for or in connection with health care or medicine.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned nearly 17% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPHX has an annual expense ratio of 0.70%, which is below the category average of 1.26%.
Fidelity Select Biotechnology Portfolio (FBIOX - Free Report) fund aims for capital appreciation. This non-diversified fund invests the majority of its net assets in common stocks of companies mostly engaged in the research, development and distribution of biotechnological products.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 10.2% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FBIOX has an annual expense ratio of 0.72%, which is below the category average of 1.26%.
PGIM Jennison Health Sciences Fund- Class Z (PHSZX - Free Report) aims for long-term capital appreciation. This non-diversified fund invests the majority of its assets in securities of companies that function within the healthcare sector, such as pharmaceutical companies, biotechnology companies, medical device manufacturers, healthcare service.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 11.9% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PHSZX has an annual expense ratio of 0.86%, which is below the category average of 1.26%.
T. Rowe Price Health Sciences Fund (PRHSX - Free Report) aims for long-term capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of large- and mid-capitalization companies mostly engaged in research, production and distribution of products and services in the healthcare-related industry.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 14.8% over the past three years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRHSX has an annual expense ratio of 0.76%, which is below the category average of 1.26%.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>