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Mutual Fund Commentary

When markets are passing through choppy waters, investors often rely on the healthcare sector to safeguard their investments. This is because the demand for healthcare services does not vary with market conditions, making them a safe haven during difficult times. Many pharma companies also generate regular dividends, which go a long way in softening the blow dealt by plummeting share prices. Mutual funds are the perfect choice for investors looking to enter this sector since they possess the advantages of wide diversification and analytical insight.

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 - 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. It focuses on acquiring common stocks and purchases both domestic and foreign securities. The healthcare mutual fund has a three year annualized return of 16.89%.

The healthcare mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.80% compared to a category average of 1.52%.

Manning & Napier Life Sciences seeks capital appreciation over the long term. The fund invests heavily in securities of companies from the life sciences sector. Domestic and foreign equity, ADRs and U.S. dollar denominated foreign securities make up the majority of its assets. The healthcare mutual fund has a three year annualized return of 11.67%.

As of November 2012, this health mutual fund held 36 issues, with 6.27% of its total assets invested in Strides Arcolabs Ltd.

Putnam Global Health Care A (PHSTX - MF report) invests predominantly in common stocks of large and mid size companies from the health care sector across the world. The fund may purchase both growth and value stocks. The healthcare mutual fund has a three year annualized return of 7.72%.

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

Schwab Health Care (SWHFX - MF report) seeks long term capital appreciation. The fund invests a large proportion of its assets in the healthcare sector. It mainly invests in equity securities but may also invest in derivatives. The fund focuses on investing in domestic firms, but may invest up to 25% of its assets in other countries. The healthcare mutual fund has a three year annualized return of 14.70%.

The healthcare mutual fund has a minimum initial investment of $100 and an expense ratio of 0.82% compared to a category average of 1.52%.

Biotechnology UltraSector ProFund Service (BIPSX - MF report) invests in equity securities and derivatives which together should provide daily returns which are 150% of the daily return of the Dow Jones U.S. Biotechnology Index. The healthcare mutual fund has a three year annualized return of 24.64%.

Hratch Najarian is the fund manager and has managed this healthcare mutual fund since 2011.

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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