Healthcare is usually a sought-after sector for investors looking to safeguard their investments in a volatile market. This is primarily because the demand for healthcare services is not directly linked with the upside or downside of a market, and on the contrary, provides protection against market volatility. Also, many pharmaceutical companies regularly offer dividends, which highlights their financial stability and ability to generate stable cash flows irrespective of the market condition.
Currently, the global spend in the healthcare sector is about $8.3 trillion, of which almost half is spent in 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 reach $6.2 trillion by 2028. With the sector growing significantly faster than the overall global economy, these numbers may compound even higher by the end of the decade. So for investors trying to look beyond the current goings on in the market, the health sector presents itself as a bankable option.
Healthcare mutual funds are, thus, great options for investors seeking to hold a diversified portfolio and look toward the future. The major upsides seen by the sector since the start of the COVID-19 pandemic maybe over, but it is slated to do well in the years 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) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and carry a low expense ratio.
Fidelity Select Biotechnology Portfolio ( FBIOX Quick Quote FBIOX - 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.
Rajiv Kaul has been the lead manager of FBIOX since Oct 11, 2005. The fund has 11.8% of its portfolio invested in Abbvie, 6.4% in Vertex Pharmaceuticals and 3.5% in Alnylam Pharmaceuticals.
FBIOX’s 3-year and 5-year annualized returns are 6.1% and 3.3%, respectively. Its net expense ratio is 0.69% compared to the category average of 1.03%. FBIOX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds,
please click here. Putnam Global Health Care Fund ( PCHSX Quick Quote PCHSX - Free Report) primarily invests in common stocks of large and mid-cap healthcare companies. PCHSX invests in companies that its advisors believes have favorable investment potential.
Michael Maguire has been the lead manager of PCHSX since Nov 15, 2016. The fund has 9% of its portfolio invested in UnitedHealth Group, 6.3% in Astrazeneca and 6.2% in Merck.
PCHSX’s 3-year and 5-year annualized returns are 11.4% and 8.4%, respectively. Its net expense ratio is 0.89% compared to the category average of 1.03%. PCHSX has a Zacks Mutual Fund Rank #2.
Schwab Health Care Fund ( SWHFX Quick Quote SWHFX - Free Report) primarily invests in equity securities issued by companies in the healthcare sector, which includes pharmaceutical and biotechnology companies, healthcare facilities operations, medical product manufacturers and suppliers, medical providers and medical services firms.
Wei Li has been the lead manager of SWHFX since Jun 13, 2013. The fund has 6.7% of its portfolio invested in UnitedHealth Group, 5.7% in Johnson & Johnson and 5.1% in Pfizer.
SWHFX’s 3-year and 5-year annualized returns are 10.6% and 8.2%, respectively. Its net expense ratio is 0.80% compared to the category average of 1.03%. SWHFX has a Zacks Mutual Fund Rank #1.
Vanguard Health Care Fund ( VGHCX Quick Quote VGHCX - Free Report) primarily invests in the stocks of companies principally engaged in the development, production, or distribution of products and services in the health care 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 7.4% of its portfolio invested in UnitedHealth Group, 5.9% in Astrazeneca and 5.9% in Eli Lilly.
VGHCX’s 3-year and 5-year annualized returns are 10.6% and 8%, respectively. Its net expense ratio is 0.30% compared to the category average of 1.03%. VGHCX has a Zacks Mutual Fund Rank #1.
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