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3 Healthcare Mutual Funds for Stellar Returns

Zacks Equity Research
·2-min read

Investors often rely on the healthcare sector to safeguard their investments. This is because healthcare services do not see their demand varying too much with respect to 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 steady cash flows, irrespective of market conditions. Mutual funds are perfect for investors looking to enter this sector since they possess the advantages of wide diversification and analytical insight.

Below, we share with you three healthcare mutual funds, viz., Fidelity Select Pharmaceuticals Portfolio fund FPHAX,Vanguard Health Care Fund VGHCX and Fidelity Select Health Care FSHCX. 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 Pharmaceuticals Portfolio fund seeks capital appreciation. FPHAX invests its assets in companies engaged in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs of all kinds.

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Fidelity Select Pharmaceuticals Portfolio fund has five-year annualized returns of 12.4%. As of the end of February 2024, FPHAX held 60 issues, with 24.2% of its assets invested in Eli Lilly & Co.

Vanguard Health Care Fund seeks long-term growth of capital and dividend income. VGHCX invests in common stocks of companies in a variety of segments of the healthcare industry. Its selections may include pharmaceutical firms, designers and manufacturers of medical equipment and supplies, operators of hospitals and other healthcare facilities, and biotechnological researchers.

Vanguard Health Care Fund has three-year annualized returns of 5.9%. VGHCX has an expense ratio of 0.35%.

Fidelity Select Health Care Services Portfolio seeks capital appreciation. FSHCX invests in common stocks of companies principally engaged in the ownership or management of hospitals, nursing homes, health maintenance organizations, and other companies specializing in the delivery of healthcare services.

Fidelity Select Health Care Services Portfolio has a three-year annualized return of 1%. Justin Segalini has been the fund manager of FSHCX since January 2016.

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

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Zacks Investment Research