Top 5 Healthcare Mutual Funds (Oct. 2011)

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.

Putnam Global Health Care A (PHSTX) invests primarily in companies from the health care sector. Common stocks of large and midcap firms across the world constitute the majority of his investments. The fund may purchase both growth and value stocks. The health mutual fund returned 10.23% over the last one year period.

The health mutual fund has a minimum initial investment of $500 and an expense ratio of 1.33% compared to a category average of 1.60%.

Vanguard Health Care (VGHCX) seeks capital growth in the long term. The fund utilizes a large share of its assets to purchase equity securities of companies from the health care sector. This includes firms focusing on research activities such as drug discovery. Not more than half of the fund’s assets may be invested in foreign equity. The health mutual fund has a ten year annualized return of 7.77%.

Jean M. Hynes is the fund manager and has managed this health mutual fund since 2008.

Delaware Healthcare A (DLHAX) invests the majority of its assets in the healthcare sector. The fund purchases equity of both domestic and foreign companies regardless of their size. It may also invest in emerging market stocks. The health mutual fund has a three year annualized return of 17.17%.

As of August 2011, this health mutual fund held 44 issues, with 7.65% of its total assets invested in Avon Products Inc.

T. Rowe Price Health Sciences (PRHSX) seeks capital appreciation in the long term. The fund 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. The health mutual fund has a five year annualized return of 8.2%.

The health mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.84% compared to a category average of 1.60%.

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 organizations and other firms focusing on delivery of healthcare services. The healthcare mutual fund returned 36.94% over the last one year period.

Andrew Hatem is the fund manager and has managed this health mutual fund since 2009.

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

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.

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