Investors often rely on the healthcare sector for safeguarding their investments. This is because healthcare services’ demand does not vary much with market conditions and thus offer sufficient protection to the capital invested.
Many pharmaceutical companies also offer regular dividends. Companies that consistently pay out dividends are financially stable and generate stable 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.
Below we share with you three top-ranked healthcare mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of funds.
Fidelity Select Medical (NYSE:SEM) Technology and Devices Portfolio FSMEX 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. The non-diversified fund invests in common stocks and in U.S. and non-U.S. issuers. FSMEX has three-year annualized returns of 22.2%.
Edward L. Yoon is the fund manager of FSMEX since 2007.
T. Rowe Price Health Sciences Fund PRHSX is a non-diversified fund that invests more than 80% of its assets in common stocks of companies engaged in various activities in the field of healthcare, medicine or life sciences. The fund mostly invests in mid- and large-capitalization companies. PRHSX has three-year annualized returns of 17.4%.
As of the end of December 2020, PRHSX held 162 issues with 6.4% of its assets invested in UnitedHealth Group Inc (NYSE:UNH).
Fidelity Select Health Care Portfolio FSPHX is a non-diversified fund that aims for capital appreciation. The fund invests the majority of its assets in common stocks of companies engaged in designing, manufacturing, or sale of products or services related to healthcare or medicine. FSPHX has three-year annualized returns of 18.6%.
FSPHX has an expense ratio of 0.70% compared with the category average of 1.18%.
To view the Zacks Rank and past performance of all healthcare mutual funds, investors can click here to see the complete list of funds.
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