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The healthcare sector is often treated as a safe haven by mutual fund investors. The sector’s decent performance despite market gyrations and higher dividend yields make it a lucrative option for investors seeking both stability and steady gains. Let us thus take a look some mutual funds from the space that performed well this year.
Healthcare Has Fared Well So Far in 2019
The U.S. healthcare sector has put up a decent performance so far this year. The Health Care Select Sector SPDR Fund (XLV) has gained 19% on a year-to-date basis, which is a reflection of various activities going on in the healthcare space.
Of course, the nature of products and services provided by the sector is a major reason behind the sector’s impressive growth so far this year. After all, demand for drugs, medical services and intensive care doesn’t wane even in times of economic downturns.
IPOs, M&As and FDA Approvals Boost Healthcare
However, carefully considering the underlying factors that pushed the sector, one will note a record number of mergers and acquisitions, approvals from the Food and Drug Administration (FDA) and some notable initial public offerings of healthcare companies.
According to MobiHealthNews, as many as 53 new acquisitions have taken place this year. However, not all of these have closed in 2019. The list includes several deals announced late in the year as well.
The deals tracked by MobiHealthNews added to about $8.16 billion, including those inked by big tech companies like Alphabet, Amazon and Apple, along with healthcare giants such as Philips, Medtronic and UnitedHealthcare. Dassault Systèmes’ acquisition of Medidata, Elsevier’s acquisition of 3D4 Medical and BioTelemetry’s acquisition of Geneva Healthcare especially made headlines.
Coming to IPOs, emergence of companies such as Karuna Therapeutics, Inc. and Turning Point Therapeutics, Inc. boosted the segment significantly. Karuna Therapeutics is a clinical-stage biopharmaceutical company and Turning Point is a San Diego-based developer of targeted cancer drugs. Both of these companies emphasize developing novel therapies. Many more initial public offerings in the healthcare space are expected to cause a stir in the U.S. healthcare sector ahead.
The sector has also added a record number of new jobs this year. According to the U.S. Bureau of Labor Statistics, healthcare added 45,000 jobs in November, following little change in October (+12,000). The November job additions occurred in ambulatory healthcare services (+34,000) and in hospitals (+10,000). The sector has added 414,000 jobs over the last 12 months.
4 Top Healthcare Funds of 2019
We have, therefore, selected four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) and invest in the healthcare sector. All of these funds have returned more than 25% to investors on a year-to-date basis. In addition, the minimum initial investment is within $5,000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
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).
Hartford Healthcare HLS Fund Class IA (HIAHX - Free Report) aims for long-term capital growth. The fund invests the majority of its assets in equity securities of healthcare-related companies from around the globe. The fund also invests across all market capitalizations.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
HIAHX has an annual expense ratio of 0.89%, which is below the category average of 1.26%. It has returned 28.4% on a year-to-date basis. HIAHX has no minimum initial investment.
Fidelity Select Medical Technology and Devices Portfolio (FSMEX - Free Report) fund invests the majority of its assets in securities of companies mostly engaged in research, development, manufacture, distribution, supply or marketing of products and services primarily related to the healthcare sector. The fund seeks capital appreciation.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSMEX has an annual expense ratio of 0.73%, which is below the category average of 1.26%. It has returned 26.5% on a year-to-date basis. FSMEX has no minimum initial investment.
T. Rowe Price Health Sciences Fund (PRHSX - Free Report) aims for capital growth. The fund invests the majority of its assets in the common stocks of companies mostly engaged in various activities in the healthcare sector. These activities may include research, development, production or distribution of products or services in healthcare. PRHSX is non-diversified fund.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRHSX has an annual expense ratio of 0.77%, which is below the category average of 1.26%. It has returned 25.5% on a year-to-date basis. PRHSX has a minimum initial investment of $2500.
Fidelity Select Health Care Portfolio (FSPHX - Free Report) fund aims for capital appreciation. The fund invests the majority of its assets in securities of companies primarily engaged in the designing, manufacturing or marketing of products or services used in the healthcare sector. The non-diversified fund invests in both U.S. and non-U.S. companies.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPHX has an annual expense ratio of 0.71%, which is below the category average of 1.26%. It has returned 25.2% on a year-to-date basis. FSPHX has no minimum initial investment.
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4 Best Healthcare Mutual Funds of 2019
The healthcare sector is often treated as a safe haven by mutual fund investors. The sector’s decent performance despite market gyrations and higher dividend yields make it a lucrative option for investors seeking both stability and steady gains. Let us thus take a look some mutual funds from the space that performed well this year.
Healthcare Has Fared Well So Far in 2019
The U.S. healthcare sector has put up a decent performance so far this year. The Health Care Select Sector SPDR Fund (XLV) has gained 19% on a year-to-date basis, which is a reflection of various activities going on in the healthcare space.
Of course, the nature of products and services provided by the sector is a major reason behind the sector’s impressive growth so far this year. After all, demand for drugs, medical services and intensive care doesn’t wane even in times of economic downturns.
IPOs, M&As and FDA Approvals Boost Healthcare
However, carefully considering the underlying factors that pushed the sector, one will note a record number of mergers and acquisitions, approvals from the Food and Drug Administration (FDA) and some notable initial public offerings of healthcare companies.
According to MobiHealthNews, as many as 53 new acquisitions have taken place this year. However, not all of these have closed in 2019. The list includes several deals announced late in the year as well.
The deals tracked by MobiHealthNews added to about $8.16 billion, including those inked by big tech companies like Alphabet, Amazon and Apple, along with healthcare giants such as Philips, Medtronic and UnitedHealthcare. Dassault Systèmes’ acquisition of Medidata, Elsevier’s acquisition of 3D4 Medical and BioTelemetry’s acquisition of Geneva Healthcare especially made headlines.
Coming to IPOs, emergence of companies such as Karuna Therapeutics, Inc. and Turning Point Therapeutics, Inc. boosted the segment significantly. Karuna Therapeutics is a clinical-stage biopharmaceutical company and Turning Point is a San Diego-based developer of targeted cancer drugs. Both of these companies emphasize developing novel therapies. Many more initial public offerings in the healthcare space are expected to cause a stir in the U.S. healthcare sector ahead.
The sector has also added a record number of new jobs this year. According to the U.S. Bureau of Labor Statistics, healthcare added 45,000 jobs in November, following little change in October (+12,000). The November job additions occurred in ambulatory healthcare services (+34,000) and in hospitals (+10,000). The sector has added 414,000 jobs over the last 12 months.
4 Top Healthcare Funds of 2019
We have, therefore, selected four mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy) and invest in the healthcare sector. All of these funds have returned more than 25% to investors on a year-to-date basis. In addition, the minimum initial investment is within $5,000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
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).
Hartford Healthcare HLS Fund Class IA (HIAHX - Free Report) aims for long-term capital growth. The fund invests the majority of its assets in equity securities of healthcare-related companies from around the globe. The fund also invests across all market capitalizations.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
HIAHX has an annual expense ratio of 0.89%, which is below the category average of 1.26%. It has returned 28.4% on a year-to-date basis. HIAHX has no minimum initial investment.
Fidelity Select Medical Technology and Devices Portfolio (FSMEX - Free Report) fund invests the majority of its assets in securities of companies mostly engaged in research, development, manufacture, distribution, supply or marketing of products and services primarily related to the healthcare sector. The fund seeks capital appreciation.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSMEX has an annual expense ratio of 0.73%, which is below the category average of 1.26%. It has returned 26.5% on a year-to-date basis. FSMEX has no minimum initial investment.
T. Rowe Price Health Sciences Fund (PRHSX - Free Report) aims for capital growth. The fund invests the majority of its assets in the common stocks of companies mostly engaged in various activities in the healthcare sector. These activities may include research, development, production or distribution of products or services in healthcare. PRHSX is non-diversified fund.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
PRHSX has an annual expense ratio of 0.77%, which is below the category average of 1.26%. It has returned 25.5% on a year-to-date basis. PRHSX has a minimum initial investment of $2500.
Fidelity Select Health Care Portfolio (FSPHX - Free Report) fund aims for capital appreciation. The fund invests the majority of its assets in securities of companies primarily engaged in the designing, manufacturing or marketing of products or services used in the healthcare sector. The non-diversified fund invests in both U.S. and non-U.S. companies.
This Zacks sector – Health product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSPHX has an annual expense ratio of 0.71%, which is below the category average of 1.26%. It has returned 25.2% on a year-to-date basis. FSPHX has no minimum initial investment.
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