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Which Healthcare Fund to Buy: FSHCX or JAGLX?

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Investors often rely on the healthcare sector to safeguard their investments. This is because demand for healthcare services does not vary so much with market conditions and investments in the sector provide sufficient protection to the capital invested.

So far this year, mega-scale healthcare mergers, corporate restructuring as well as FDA approvals have buoyed gains for the space. As a matter of fact, America’s healthcare sector is being anticipated to experience a major revolution in the days to come. With an uptick in over-the-counter drug sales coupled with major breakthroughs in the treatment of rare conditions, the healthcare space is deemed to gain big.

The U.S. healthcare sector has performed decently so far this year. The Health Care Select Sector SPDR Fund (XLV) has gained 9.5% year to date despite fears related to a slowdown in the global economy and trade tensions.

Mutual funds are perfect choices for investors looking to enter this sector since they possess the advantages of wide diversification and analytical insight. However, choosing the right mutual funds for your portfolio can become cumbersome. Let us, therefore, discuss which of these two funds are better for you.

Fidelity Select Health Care Services Portfolio (FSHCX - Free Report)

This fund seeks long-term growth of capital and invests a bulk of its shares in securities of companies involved in the ownership and management of hospitals, nursing homes and health maintenance organizations. FSHCX also invests in companies that provide direct healthcare services. This non-diversified fund invests in common stocks of both U.S. and non-U.S. companies.

This Sector-Health product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 10.1% over the 3-year and 9.4% of the 5-year period. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.  

The Fidelity Select Health Care Services Portfolio fund, as of the last filing, allocates its assets in top two major groups — Large Value and Small Growth. Further, as of the last filing, Unitedhealth Group Inc, Cigna Corp and Humana Inc were the top holdings for FSHCX.

This product with a Zacks Mutual Fund Rank #1 (Strong Buy) was incepted in June 1986 and is managed by Fidelity. FSHCX carries an expense ratio of 0.76% and requires a minimal initial investment of $0.

Janus Henderson Global Life Sciences Fund Class T (JAGLX - Free Report)

The fund invests in securities of companies that have a life science orientation. JAGLX invests a minimum of one-fourth of its assets in securities issued by companies that are categorized in the "life sciences" sector.

This Sector-Health product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the 3 and 5-year benchmarks are 8.4% and 7.8%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.  

Janus Henderson Global Life Sciences Fund Class T, as of the last filing, allocates its assets in the top two major groups — Small Growth and Foreign Bond. Further, as of the last filing, Merck & Co and Abbott Laboratories were the top holdings for JAGLX.

This product with a Zacks Rank #2 (Buy) was incepted in December 1998 and is managed by Janus Fund. JAGLX carries an expense ratio of 0.92% and requires a minimal initial investment of $2,500.

To Conclude

While both FSHCX and JAGLX are recommended buys, upon having a closer look, we find that the former is a clear winner. JAGLX is much more expensive compared to FSHCX (it has a minimum initial investment $2,500 compared to FSHCX’s $0). Further, its administrative and other operating expenses are also higher compared to FSHCX. So, one should clearly bet on FSHCX for higher returns on low investments.

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