Healthcare is a sought-after sector for investors looking to add a safeguard to their portfolio in a volatile market. This is because of the defensive nature of the sector. The demand for healthcare services is not dependent on the upheavals of a market, and hence, provides protection against market volatility. Additionally, pharmaceutical companies are known to offer regular dividends. This showcases financial stability and the ability to generate stable cash flows regardless of the market condition.
Global spending in the healthcare sector was about $8 trillion at the end of 2022, of which almost half is accounted for by the United States. Health spending in the United States is projected to grow at an average annual rate of 5.4% for 2019-2028 and to reach $6.2 trillion by 2028. With the sector growing significantly faster than the overall global economy, these numbers and the United States' share in the pie might only keep increasing.
Healthcare has also bucked the trend of 2022 and has actually seen growth in the ETF market. The S&P 500 Select Sector SPDR for Healthcare (XLV) grew 3.1% over the past year as of Jan 31, 2023. Healthcare mutual funds are, thus, great options for investors seeking to hold a diversified portfolio and are looking toward the future. The sector may not be reaping dividends like it was in the early Covid-19 years, but it will be resilient and continue to grow in the decades to come.
Hence, astute investors should invest in healthcare mutual funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected four such healthcare mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.
Fidelity Advisor Biotechnology Fund (FBTIX - Free Report) primarily invests in common stocks of companies principally engaged in the research, development, manufacture and distribution of various biotechnological products, services and processes. To select their investments, FBIOX advisors use fundamental analysis of factors such as each issuer's financial condition and industry position, as well as market and economic conditions.
Eirene Kontopoulos has been the lead manager of FBTIX since Jul 14, 2018. The fund has 13.5% of its portfolio invested in AbbVie, 9.2% in Vertex Pharmaceuticals and 6.7% in Regeneron Pharmaceuticals.
FBTIX’s 3-year and 5-year annualized returns are 5.7% and 7.5%, respectively. Its net expense ratio is 0.73% compared to the category average of 1.03%. FBTIX has a Zacks Mutual Fund Rank #2. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Putnam Global Health Care Fund (PHSYX - Free Report) primarily invests in common stocks of large and mid-cap healthcare companies. PHSYX invests in companies that its advisors believe have favorable investment potential.
Michael Maguire has been the lead manager of PHSYX since Nov 15, 2016. The fund has 10% of its portfolio invested in UnitedHealth Group, 6.6% in AstraZeneca and 5.2% in Merck.
PHSYX’s 3-year and 5-year annualized returns are 9.9% and 11.6%, respectively. Its net expense ratio is 0.80% compared to the category average of 1.03%. PHSYX has a Zacks Mutual Fund Rank #2.
Janus Henderson Global Life Sciences Fund (JNGLX - Free Report) primarily invests in equity securities issued by companies engaged in life sciences orientation, which includes pharmaceutical and biotechnology companies, healthcare facility operations, medical product manufacturers and suppliers, medical providers and medical services firms.
Andrew Acker has been the lead manager of JNGLX since Apr 30, 2007. The fund has 7% of its portfolio invested in UnitedHealth Group, 4.2% in AstraZeneca and 3.7% in AbbVie.
JNGLX’s 3-year and 5-year annualized returns are 9.3% and 12%, respectively. Its net expense ratio is 0.80% compared to the category average of 1.03%. JNGLX has a Zacks Mutual Fund Rank #1.
Vanguard Health Care Fund (VGHCX - Free Report) primarily invests in the stocks of companies principally engaged in the development, production, or distribution of products and services in the healthcare industry. VGHCX may invest up to 50% of its assets in foreign stocks.
Jean M. Hynes has been the lead manager of VGHCX since May 28, 2008. The fund has 7.3% of its portfolio invested in UnitedHealth Group, 5.9% in Eli Lilly, and 5.8% in Pfizer.
VGHCX’s 3-year and 5-year annualized returns are 8.4% and 9.6%, respectively. Its net expense ratio is 0.32% compared to the category average of 1.03%. VGHCX has a Zacks Mutual Fund Rank #1.
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Healthcare is a sought-after sector for investors looking to add a safeguard to their portfolio in a volatile market. This is because of the defensive nature of the sector. The demand for healthcare services is not dependent on the upheavals of a market, and hence, provides protection against market volatility. Additionally, pharmaceutical companies are known to offer regular dividends. This showcases financial stability and the ability to generate stable cash flows regardless of the market condition.
Global spending in the healthcare sector was about $8 trillion at the end of 2022, of which almost half is accounted for by the United States. Health spending in the United States is projected to grow at an average annual rate of 5.4% for 2019-2028 and to reach $6.2 trillion by 2028. With the sector growing significantly faster than the overall global economy, these numbers and the United States' share in the pie might only keep increasing.
Healthcare has also bucked the trend of 2022 and has actually seen growth in the ETF market. The S&P 500 Select Sector SPDR for Healthcare (XLV) grew 3.1% over the past year as of Jan 31, 2023. Healthcare mutual funds are, thus, great options for investors seeking to hold a diversified portfolio and are looking toward the future. The sector may not be reaping dividends like it was in the early Covid-19 years, but it will be resilient and continue to grow in the decades to come.
Hence, astute investors should invest in healthcare mutual funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have thus selected four such healthcare mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.
Fidelity Advisor Biotechnology Fund (FBTIX - Free Report) primarily invests in common stocks of companies principally engaged in the research, development, manufacture and distribution of various biotechnological products, services and processes. To select their investments, FBIOX advisors use fundamental analysis of factors such as each issuer's financial condition and industry position, as well as market and economic conditions.
Eirene Kontopoulos has been the lead manager of FBTIX since Jul 14, 2018. The fund has 13.5% of its portfolio invested in AbbVie, 9.2% in Vertex Pharmaceuticals and 6.7% in Regeneron Pharmaceuticals.
FBTIX’s 3-year and 5-year annualized returns are 5.7% and 7.5%, respectively. Its net expense ratio is 0.73% compared to the category average of 1.03%. FBTIX has a Zacks Mutual Fund Rank #2. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Putnam Global Health Care Fund (PHSYX - Free Report) primarily invests in common stocks of large and mid-cap healthcare companies. PHSYX invests in companies that its advisors believe have favorable investment potential.
Michael Maguire has been the lead manager of PHSYX since Nov 15, 2016. The fund has 10% of its portfolio invested in UnitedHealth Group, 6.6% in AstraZeneca and 5.2% in Merck.
PHSYX’s 3-year and 5-year annualized returns are 9.9% and 11.6%, respectively. Its net expense ratio is 0.80% compared to the category average of 1.03%. PHSYX has a Zacks Mutual Fund Rank #2.
Janus Henderson Global Life Sciences Fund (JNGLX - Free Report) primarily invests in equity securities issued by companies engaged in life sciences orientation, which includes pharmaceutical and biotechnology companies, healthcare facility operations, medical product manufacturers and suppliers, medical providers and medical services firms.
Andrew Acker has been the lead manager of JNGLX since Apr 30, 2007. The fund has 7% of its portfolio invested in UnitedHealth Group, 4.2% in AstraZeneca and 3.7% in AbbVie.
JNGLX’s 3-year and 5-year annualized returns are 9.3% and 12%, respectively. Its net expense ratio is 0.80% compared to the category average of 1.03%. JNGLX has a Zacks Mutual Fund Rank #1.
Vanguard Health Care Fund (VGHCX - Free Report) primarily invests in the stocks of companies principally engaged in the development, production, or distribution of products and services in the healthcare industry. VGHCX may invest up to 50% of its assets in foreign stocks.
Jean M. Hynes has been the lead manager of VGHCX since May 28, 2008. The fund has 7.3% of its portfolio invested in UnitedHealth Group, 5.9% in Eli Lilly, and 5.8% in Pfizer.
VGHCX’s 3-year and 5-year annualized returns are 8.4% and 9.6%, respectively. Its net expense ratio is 0.32% compared to the category average of 1.03%. VGHCX has a Zacks Mutual Fund Rank #1.
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Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>
Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry
Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
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