Top 5 Zacks #1 Ranked Healthcare Mutual Funds

Zacks Investment Research
July 6, 2012

The healthcare sector is one of the most desirable avenues for parking investments when markets are headed south. The demand for such services usually remains unchanged even during an economic downturn and investments in the sector provide sufficient protection to the capital invested. Several pharmaceutical companies also provide regular dividends, which can help mitigate losses from falling share prices. Healthcare mutual funds provide the perfect avenue for investors looking to invest in this sector.

Below we will share with you 5 top rated health mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.  To view the Zacks Rank and past performance of all health funds, investors can click here to see the complete list of funds.

Fidelity Select Health Care (FSPHX) seeks capital growth. The fund invests the majority of its assets in companies whose principal operations include production, design and sales of health care related products or services. It focuses on acquiring common stocks and purchases both domestic and foreign securities. The healthcare mutual fund has a three year annualized return of 19.39%.

The healthcare mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.80% compared to a category average of 1.51%.

Schwab Health Care (SWHFX) invests heavily in the healthcare sector. It primarily purchases equity securities but may also invest in future contracts. It focuses on investing in domestic firms, but may invest up to 25% of its assets in other countries. The healthcare mutual fund has a three year annualized return of 15.87%.

Paul Alan Davis is the fund manager and has managed this healthcare mutual fund since 2006.

T. Rowe Price Health Sciences (PRHSX) seeks capital growth over the long term. The fund invests the majority of its assets in common stocks of companies whose primary operations are related to healthcare products medicine or life sciences. The fund focuses on investing in large and mid-cap firms. The healthcare mutual fund has a three year annualized return of 23.97%.

The healthcare mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.82% compared to a category average of 1.51%.

ProFunds Pharmaceuticals UltraSector (PHPSX) invests in equity securities and derivatives which together should provide daily returns which are 150% of the daily return of the Dow Jones U.S. Pharmaceuticals Index. The balance of the fund’s assets is utilized to purchase money market securities. The healthcare mutual fund has a three year annualized return of 19.15%.

As of January 2012, this health mutual fund held 28 issues, with 15.60% of its total assets invested in Johnson & Johnson.

Vanguard Health Care Index (VHCIX) seeks to match the performance of the MSCI U.S. Investable Market Health Care 25/50 index and invests primarily in healthcare stocks. This index consists of stocks of companies of all sizes from this sector. The healthcare mutual fund has a three year annualized return of 15.33%.

Ryan E. Ludt is the fund manager and has managed this healthcare mutual fund since 2004.

To view the Zacks Rank and past performance of all health mutual funds, investors can click here to see the complete list of funds.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.

Read the analyst report on FSPHX

Read the analyst report on SWHFX

Read the analyst report on PRHSX

Read the analyst report on PHPSX

Read the analyst report on VHCIX



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