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Which Healthcare Mutual Fund to Buy: FSMEX or PRHSX?
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Often, the healthcare sector is relied on for safeguarding investments. This is because demand for healthcare services does not vary much with market conditions and investments in the sector provide sufficient protection to the capital invested.
Many pharmaceutical companies also offer regular dividends. Companies that pay out consistent dividends are financially stable and generate consistent cash flows irrespective of market conditions. Mutual funds are perfect choices for investors looking to enter this sector since they possess the advantages of wide diversification and analytical insight.
The U.S. healthcare sector has performed decently so far this year. The Health Care Select Sector SPDR Fund (XLV) has gained 16.7% year to date despite fears related to a slowdown in the global economy as well as trade tensions.
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.
Under such circumstances, investing in healthcare mutual funds seems prudent. 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 Medical Technology and Devices Portfolio (FSMEX - Free Report)
This fund aims for capital growth. It invests the majority of its assets in companies that are engaged in activities such as research, manufacturing, supply and sale of medical equipment and related technologies etc. The non-diversified fund invests in common stocks and in U.S. and non-U.S. issuers.
This Sector-Health product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 11.7% over the 3-year and 7.5% 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 Medical Technology and Devices Portfolio fund, as of the last filing, allocates its assets in top two major groups — Large Growth and Intermediate Bond. Further, as of the last filing, Boston Scientific Corp, Becton Dickinson & Company and Thermo Fisher Scientific were the top holdings for FSMEX.
This Zacks Mutual Fund Rank #1 (Strong Buy) was incepted in April 1998 and is managed by Fidelity. FSMEX carries an expense ratio of 0.73% and requires a minimal initial investment of $0.
The fund seeks appreciation of capital in the long term. It invests a minimum of 80% of its assets in common stocks of companies which are involved in research, development, production and distribution of products and services which are related to healthcare, medicine or life sciences. The fund mostly invests in mid- and large-capitalization companies.
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 are14.2% and 12.9%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
T. Rowe Price Health Sciences Fund, as of the last filing, allocates its assets in the top two major groups — Small Growth and Intermediate Bond. Further, as of the last filing, Unitedhealth Group Inc and Intuitive Surgical Inc were the top holdings for PRHSX.
This Zacks Rank #1 (Strong Buy) was incepted in December 1995 and is managed by T. Rowe Price. PRHSX carries an expense ratio of 0.77% and requires a minimal initial investment of $2,500.
To Conclude
While both FSMEX and PRHSX are recommended buys, upon having a closer look, we find that the former is a clear winner. PRHSX is much more expensive compared to FSMEX (it has a minimum initial investment $2,500 compared to FSMEX’s $0). Further, its administrative and other operating expenses are also higher compared to FSMEX. So, one should clearly bet on FSMEX for higher returns on low investments.
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Which Healthcare Mutual Fund to Buy: FSMEX or PRHSX?
Often, the healthcare sector is relied on for safeguarding investments. This is because demand for healthcare services does not vary much with market conditions and investments in the sector provide sufficient protection to the capital invested.
Many pharmaceutical companies also offer regular dividends. Companies that pay out consistent dividends are financially stable and generate consistent cash flows irrespective of market conditions. Mutual funds are perfect choices for investors looking to enter this sector since they possess the advantages of wide diversification and analytical insight.
The U.S. healthcare sector has performed decently so far this year. The Health Care Select Sector SPDR Fund (XLV) has gained 16.7% year to date despite fears related to a slowdown in the global economy as well as trade tensions.
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.
Under such circumstances, investing in healthcare mutual funds seems prudent. 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 Medical Technology and Devices Portfolio (FSMEX - Free Report)
This fund aims for capital growth. It invests the majority of its assets in companies that are engaged in activities such as research, manufacturing, supply and sale of medical equipment and related technologies etc. The non-diversified fund invests in common stocks and in U.S. and non-U.S. issuers.
This Sector-Health product has a history of positive total returns for over 10 years. Specifically, the fund’s returns are 11.7% over the 3-year and 7.5% 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 Medical Technology and Devices Portfolio fund, as of the last filing, allocates its assets in top two major groups — Large Growth and Intermediate Bond. Further, as of the last filing, Boston Scientific Corp, Becton Dickinson & Company and Thermo Fisher Scientific were the top holdings for FSMEX.
This Zacks Mutual Fund Rank #1 (Strong Buy) was incepted in April 1998 and is managed by Fidelity. FSMEX carries an expense ratio of 0.73% and requires a minimal initial investment of $0.
T. Rowe Price Health Sciences Fund (PRHSX - Free Report)
The fund seeks appreciation of capital in the long term. It invests a minimum of 80% of its assets in common stocks of companies which are involved in research, development, production and distribution of products and services which are related to healthcare, medicine or life sciences. The fund mostly invests in mid- and large-capitalization companies.
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 are14.2% and 12.9%, respectively. To see how this fund performed compared in its category, and other #1 and #2 Ranked Mutual Funds, please click here.
T. Rowe Price Health Sciences Fund, as of the last filing, allocates its assets in the top two major groups — Small Growth and Intermediate Bond. Further, as of the last filing, Unitedhealth Group Inc and Intuitive Surgical Inc were the top holdings for PRHSX.
This Zacks Rank #1 (Strong Buy) was incepted in December 1995 and is managed by T. Rowe Price. PRHSX carries an expense ratio of 0.77% and requires a minimal initial investment of $2,500.
To Conclude
While both FSMEX and PRHSX are recommended buys, upon having a closer look, we find that the former is a clear winner. PRHSX is much more expensive compared to FSMEX (it has a minimum initial investment $2,500 compared to FSMEX’s $0). Further, its administrative and other operating expenses are also higher compared to FSMEX. So, one should clearly bet on FSMEX for higher returns on low investments.
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 >>