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3 Healthcare Funds to Take Refuge in as Fed Hikes Interest Rates
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The Federal Reserve raised interest rates Wednesday at the end of its September policy meeting. Although the move was broadly expected, stocks declined following the announcement as ongoing concerns over the economy continued to weigh on consumer sentiment.
Although markets rebounded on Thursday, markets remain volatile. Inflation remains elevated, prompting the central bank to resume raising rates. Consumers are also concerned that the situation could deteriorate if continued tensions in the Middle East push oil prices higher.
Against this backdrop, it would be wise to consider investing in defensive, low-risk healthcare funds. Three such funds are Vanguard Health Care Fund (VGHCX - Free Report) , Janus Henderson Global Life Sciences D (JNGLX - Free Report) and Fidelity Select Health Care (FSPHX - Free Report) .
Fed Raises Rates, Signals Another
The Federal Reserve increased its benchmark interest rate by 25 basis points on Wednesday following its two-day FOMC meeting, taking the target range to 3.75% to 4%. The central bank's Federal Open Market Committee approved the increase unanimously, with a 12-0 vote.
The move marked the Fed's first interest rate increase since July 2023. Stocks declined after the announcement, with major market indexes finishing the session lower. Consumer confidence has remained subdued in recent weeks amid concerns that the economy could slow. At the same time, investors have been shifting away from riskier assets and toward more defensive parts of the market.
Inflation has stayed elevated for several months. Rising oil prices linked to the U.S.-Iran war, along with higher tariffs imposed by President Donald Trump on several countries, have contributed to increased prices for goods and services.
The consumer price index (CPI) increased 0.4% month over month in August. On an annual basis, CPI rose 3.4%, remaining well above the Federal Reserve's 2% inflation target. Core CPI, which excludes the more volatile food and energy categories, advanced 0.3% from the previous month in August, taking its annual increase to 2.4%.
At the end of its meeting, the Federal Reserve also indicated that another rate increase could come before the end of the year. Such a move could push borrowing costs higher and add further financial pressure on consumers.
3 Healthcare Funds to Buy
We have selected three healthcare funds that are safe bets during this time of market volatility. Moreover, these funds have encouraging three and five-year returns. The minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors in identifying 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).
Vanguard Health Care Fund invests the majority of its net assets in the common stocks of foreign and domestic companies. These companies are engaged in the development, production, or distribution of products and services related to pharmaceutical and medical supply companies, as well as businesses that operate hospitals and other healthcare facilities.
VGHCX’s 3-year and 5-year annualized returns are 8.7% and 5.4%, respectively. Vanguard Health Care Fund has a Zacks Mutual Fund Rank #2 (Buy) and an annual expense ratio of 0.33%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Janus Henderson Global Life Sciences D fund primarily invests in equity securities issued by companies engaged in life sciences orientation.
JNGLX’s 3-year and 5-year annualized returns are 14.9% and 8.5%, respectively. Janus Henderson Global Life Sciences D fund has a Zacks Mutual Fund Rank #1 (Strong Buy) and an annual expense ratio of 0.79%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Health Care fund seeks capital appreciation. FSPHX normally invests 80% of its assets in common stocks of companies principally engaged in the design, manufacture, or sale of products or services used for or in connection with healthcare or medicine.
FSPHX’s 3-year and 5-year annualized returns are 13.3% and 4.8%, respectively. Fidelity Select Health Care fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.62%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
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3 Healthcare Funds to Take Refuge in as Fed Hikes Interest Rates
The Federal Reserve raised interest rates Wednesday at the end of its September policy meeting. Although the move was broadly expected, stocks declined following the announcement as ongoing concerns over the economy continued to weigh on consumer sentiment.
Although markets rebounded on Thursday, markets remain volatile. Inflation remains elevated, prompting the central bank to resume raising rates. Consumers are also concerned that the situation could deteriorate if continued tensions in the Middle East push oil prices higher.
Against this backdrop, it would be wise to consider investing in defensive, low-risk healthcare funds. Three such funds are Vanguard Health Care Fund (VGHCX - Free Report) , Janus Henderson Global Life Sciences D (JNGLX - Free Report) and Fidelity Select Health Care (FSPHX - Free Report) .
Fed Raises Rates, Signals Another
The Federal Reserve increased its benchmark interest rate by 25 basis points on Wednesday following its two-day FOMC meeting, taking the target range to 3.75% to 4%. The central bank's Federal Open Market Committee approved the increase unanimously, with a 12-0 vote.
The move marked the Fed's first interest rate increase since July 2023. Stocks declined after the announcement, with major market indexes finishing the session lower. Consumer confidence has remained subdued in recent weeks amid concerns that the economy could slow. At the same time, investors have been shifting away from riskier assets and toward more defensive parts of the market.
Inflation has stayed elevated for several months. Rising oil prices linked to the U.S.-Iran war, along with higher tariffs imposed by President Donald Trump on several countries, have contributed to increased prices for goods and services.
The consumer price index (CPI) increased 0.4% month over month in August. On an annual basis, CPI rose 3.4%, remaining well above the Federal Reserve's 2% inflation target. Core CPI, which excludes the more volatile food and energy categories, advanced 0.3% from the previous month in August, taking its annual increase to 2.4%.
At the end of its meeting, the Federal Reserve also indicated that another rate increase could come before the end of the year. Such a move could push borrowing costs higher and add further financial pressure on consumers.
3 Healthcare Funds to Buy
We have selected three healthcare funds that are safe bets during this time of market volatility. Moreover, these funds have encouraging three and five-year returns. The minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors in identifying 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).
Vanguard Health Care Fund invests the majority of its net assets in the common stocks of foreign and domestic companies. These companies are engaged in the development, production, or distribution of products and services related to pharmaceutical and medical supply companies, as well as businesses that operate hospitals and other healthcare facilities.
VGHCX’s 3-year and 5-year annualized returns are 8.7% and 5.4%, respectively. Vanguard Health Care Fund has a Zacks Mutual Fund Rank #2 (Buy) and an annual expense ratio of 0.33%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Janus Henderson Global Life Sciences D fund primarily invests in equity securities issued by companies engaged in life sciences orientation.
JNGLX’s 3-year and 5-year annualized returns are 14.9% and 8.5%, respectively. Janus Henderson Global Life Sciences D fund has a Zacks Mutual Fund Rank #1 (Strong Buy) and an annual expense ratio of 0.79%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Fidelity Select Health Care fund seeks capital appreciation. FSPHX normally invests 80% of its assets in common stocks of companies principally engaged in the design, manufacture, or sale of products or services used for or in connection with healthcare or medicine.
FSPHX’s 3-year and 5-year annualized returns are 13.3% and 4.8%, respectively. Fidelity Select Health Care fund has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.62%.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>