Yahoo Finance 3 Healthcare Mutual Funds Thriving Amid Economic Shifts
In the current economic environment healthcare mutual funds are considered as promising investment options. Recent statements made by Federal Reserve Governor Michelle Bowman underscore the significance of strategies, amid inflation worries. "I remain willing to raise the target range for the federal funds rate at a future meeting should progress on inflation stall or even reverse," she said.
The Federal Reserve raises rates, which leads to a rise in borrowing costs for both individuals and businesses. These increased expenses can potentially slow down spending and investments, hampering growth. Moreover, elevated interest rates can impact company earnings as they grapple with borrowing costs to manage their debts. Healthcare mutual funds have demonstrated resilience during periods of rising interest rates benefiting from their attributes and steady demand for services.
Meanwhile, recent data from the Conference Board indicates a decline in consumer confidence, with the index falling to 100.4 in June from 101.3 in May. A drop in consumer confidence could favor the healthcare sector due to its demand for services and products that are less discretionary and thus less vulnerable to fluctuations in consumer sentiment. In this scenario, healthcare mutual funds stand out due to their stability and growth potential.
The consistent demand for healthcare services and products makes this sector less sensitive to fluctuations as people will always require care and treatment regardless of financial conditions. Healthcare companies typically have a lower beta value, indicating volatility compared to the broader market trends. The sector continues its advancement, in technology, pharmaceuticals, and biotechnology while maintaining demand.
Nonetheless, investing in healthcare mutual funds seems to be judicious as of now. Also, mutual funds, in general, diversify portfolios without several commission charges that are mainly associated with stock purchases and trim transaction costs (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have, thus, chosen three healthcare mutual funds that investors should buy now for the long term. These funds possess a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and expense ratios considerably lower than the category average. So, these funds have given a comparatively strong performance along with lower fees.
Fidelity Select Pharmaceuticals Portfolio FPHAX primarily invests in stocks of companies principally engaged in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs of all types. FPHAX advisors use fundamental analysis of factors like each issuer's financial condition and industry position, as well as market and economic conditions, to arrive at their investment decision.
Karim Suwwan de Felipe has been the lead manager of FPHAX since JuL 1, 2017. Most of the fund’s holdings were in Eli Lilly and Co (24.2%), Novo Nordisk A/S (14.4%) and AstraZeneca PLC (8.2%) as of Feb 29, 2024.
FPHAX’s 3-year and 5-year annualized returns are 12.4% and 16.4%, respectively. Its net expense ratio is 0.74%. FPHAX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Vanguard Health Care VGHCX primarily invests in stocks of companies principally engaged in the development, production, or distribution of products and services in the healthcare industry. VGHCX also invests a significant portion of its assets in foreign stocks.
Jean M. Hynes has been the lead manager of VGHCX since May 29, 2008. Most of the fund’s holdings were in Eli Lilly and Co (7.6%), UnitedHealth Group (6.9%) and AstraZeneca PLC (5.5%) as of Jan 1, 2024.
VGHCX’s 3-year and 5-year annualized returns are 5.9% and 11.7%, respectively. Its net expense ratio is 0.35%. VGHCX has a Zacks Mutual Fund Rank #1.
Putnam Global Health Care Fund PHSTX invests the majority of its net assets in large and midsize healthcare companies that its advisors believe have favorable investment potential.
Michael Maguire has been the lead manager of PHSTX since Nov 16, 2016. Most of the fund’s holdings were in UnitedHealth Group (9%), AbbVie Inc. (7.7%) and Eli Lilly and Co (7.7%) as of Feb 29, 2024.
PHSTX’s 3-year and 5-year annualized returns are 8.2% and 14%, respectively. Its net expense ratio is 0.53%. PHSTX has a Zacks Mutual Fund Rank #2.
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