One of the best ways to safeguard investments is by parking money in the healthcare sector. This is because demand for healthcare services does not change with market conditions. Many pharmaceutical companies also pay out regular dividends.
Companies that consistently offer dividends are financially stable and generate steady cash flows irrespective of market conditions. Mutual funds are the 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) or 2 (Buy) and is expected to outperform its peers in the future. Investors can click here to see the complete list of healthcare funds, their Zacks Rank and past performance.
PGIM Jennison Health Sciences Fund- Class A PHLAX aims for long-term capital appreciation. This non-diversified fund invests the majority of its assets in equity and equity-related securities of companies within the health sciences sector, such as pharmaceutical companies, biotechnology companies, medical device manufacturers, healthcare service providers and health maintenance organizations. PHLAX has returned 11.5% in the past three years.
David Chan is the fund manager of PHLAX since 1999.
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 14.8%.
As of the end of September 2020, PRHSX held 154 issues with 6.1% of its assets invested in UnitedHealth Group Inc.
Fidelity Select Pharmaceuticals Portfolio FPHAX aims for capital growth. The fund invests the majority of its assets in securities of companies that research, develop and manufacture all types of pharmaceuticals and drugs. The non-diversified fund invests in securities of U.S. and non-U.S. issuers alike. FPHAX mostly invests in common stocks of companies. The fund has returned 14.2% in the past three years.
FPHAX has an expense ratio of 0.78% compared with the category average of 1.22%.
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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