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Mutual Fund Commentary

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.

VALIC Company I Health Sciences (VCHSX - MF report) seeks long term capital growth. The fund invests the majority of its assets in common stocks of healthcare products, medicine or life sciences related companies. It focuses mainly on investing in large and mid-cap companies. Not more than 35% of its assets may be invested foreign securities. The healthcare mutual fund returned 41.36% over the last one year period.

The healthcare mutual fund has an expense ratio of 1.15% compared to a category average of 1.40%.

Putnam Global Health Care A (PHSTX - MF report) invests the majority of its assets in common stocks issued by domestic and foreign large and midcap companies. These companies are primarily those which operate in the healthcare sector. The mutual fund is non-diversified and returned 31.11% over the last one year period.

Kelsey Chen is the fund manager and has managed this healthcare mutual fund since 2005.

ProFunds UltraSector Health Care (HCPSX - MF report) seeks daily returns which are 150% of the daily return of the Dow Jones U.S. Biotechnology Index. The fund 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. The healthcare mutual fund returned 47.79% over the last one year period.

As of July 2013, this healthcare mutual fund held 118 issues, with 6.98% of its total assets invested in Johnson & Johnson.

Fidelity Select Health Care (FSPHX - MF report) invests the majority of its assets in companies whose principal operations include production, design and sales of health care related products or services. The fund focuses on acquiring common stocks and purchases both domestic and foreign securities. The healthcare mutual fund returned 41.15% over the last one year period.

’ The healthcare mutual fund has an expense ratio of 0.78% compared to a category average of 1.40%.

Franklin Biotechnology Discovery A (FBDIX - MF report) seeks capital growth. The majority of its assets is invested in equity of biotechnology and research companies. A maximum of 20% can also be invested in equity or debt securities of domestic or foreign companies. The healthcare mutual returned 52.44% over the last one year period.

Evan S. McCulloch is the fund manager and has managed this healthcare mutual fund since 1997.

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.

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