Top 5 Best Performing Healthcare Mutual Funds (May 2011)

When markets are headed south, the healthcare sector could become a viable option for parking investments. This is because the demand for health services remains largely unaffected by the state of the economy. In addition, several pharmaceutical companies pay out a dividend regularly, which has a healing effect on their share prices. With the advantages of professional management and a disciplined approach, healthcare mutual funds are the perfect choice for investors looking to reap benefits from this sector.

Below we will share with you the 5 best performing healthcare mutual funds year to date.

Mutual Fund Zacks Rank Total Return YTD
Touchstone Healthcare & Biotechnology A #1 Strong Buy 21.2%
Fidelity Select Medical Delivery #1 strong Buy 19.7%
ProFunds Healthcare UltraSector #1 Strong Buy 18.9%
T. Rowe Price Health Sciences #1 Strong Buy 18.6%
Fidelity Select Biotechnology #4 Sell 18.2%

Touchstone Healthcare & Biotechnology A (THBCX) seeks capital appreciation over the long term. The fund invests the majority of its assets in domestically traded stocks of healthcare and biotech firms. It focuses on acquiring common stocks of large and mid-cap companies, but may also invest in smaller firms. The healthcare mutual fund has a five year annualized return of 3.59%.

The healthcare mutual fund has a minimum initial investment of $2,500 and an expense ratio of 1.55% compared to a category average of 1.77%.

Fidelity Select Medical Delivery (FSHCX) invests in firms engaged in the delivery of health care services. Such companies include those which manage hospitals, nursing homes health maintenance organisations and other firms focussing on delivery of healthcare services. It is non-diversified and may also purchase foreign securities. It is a no load fund.

The healthcare mutual fund has a ten year annualized return of 11.65%.

ProFunds UltraSector Health Care (HCPSX) seeks to exceed the performance of by 150% on a daily basis. With this view, the fund holds a portfolio comprising of securities that have identical daily return features. The healthcare mutual fund returned 21.74% over the last one year period.

Todd Johnson is the fund manager and he has managed this healthcare mutual fund since 2008.

T. Rowe Price Health Sciences (PRHSX) invests heavily in common stocks of companies whose primary operations are related to healthcare products medicine or life sciences. The fund focuses on purchasing securities issued by large and mid-cap companies, though its may invest in smaller firms. The healthcare mutual fund has a three year annualized return of 12.1%.

As of March 2011, this healthcare mutual fund held 158 issues, with 6.42% of its total assets invested in Alexion Pharmaceuticals, Inc.

Fidelity Select Biotechnology (FBIOX) seeks capital growth. The fund invests the majority of its assets in equity securities of biotechnology companies. These firms include those engaged in drug development and delivery, including those operating in the veterinary sphere. The healthcare mutual fund returned 18.74% over the last one year period.

The healthcare mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.86% compared to a category average of 1.73%.

To view the Zacks Rank and past performance of all healthcare mutual funds, then click here.

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