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3 Healthcare Mutual Funds to Counter Market Upheavals
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The Federal Reserve increased the benchmark interest rate in the July meeting to its highest level in over two decades. The increase in interest rates directly impacts various stakeholders, including businesses, consumers and investors. Companies might find it harder to fund expansions and investments, while consumers could reduce spending due to higher borrowing costs.
In the vast landscape, a spotlight is on non-cyclical stocks, also known as defensive stocks, which tend to remain stable regardless of economic conditions. These stocks belong to sectors like healthcare.
The healthcare industry is inherently non-cyclical due to its critical role in providing life-saving products and services that are essential irrespective of economic fluctuations. Pharmaceuticals represent this trait within the healthcare sector.
Pharmaceutical companies play a crucial role in producing and distributing vital medicines that are essential for people's well-being. Even during economic downturns, the demand for essential medications remains constant as health is a primary concern for people regardless of their financial situation. This stability provides a shield against the negative effects of rising interest rates. Healthcare companies' ability to offer products and services that address fundamental human needs ensures their resilience in the face of economic challenges.
Thus, it’s imperative for astute investors to place bets on solid healthcare mutual funds for stable returns amid an economic downturn. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (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 provided comparatively strong performance along with lower fees.
Janus Henderson Global Life Sciences Fund (JNGLX - Free Report) invests its net assets in securities issued by firms that the portfolio managers believe put emphasis on life science in order to meet its investment goal. JNGLX has created a fundamental policy mandating a minimum investment of its total assets in securities issued by firms categorized under the "life sciences" sector as part of its strategy to locate such companies.
Andrew Acker has been the lead manager of JNGLX since Apr 30, 2007. Most of the fund's holdings were in companies like UnitedHealth Group Inc (6.1%), AstraZeneca plc (4.4%) and Akero Therapeutics, Inc. (3.4%) as of Mar 31, 2023.
JNGLX's 3-year and 5-year annualized returns are 8.4% and 10%, respectively. Its net expense ratio is 0.80% compared with the category average of 1.03%. JNGLX 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 Fund (VGHCX - Free Report) invests its assets 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 28, 2008. Most of the fund's holdings were in companies like Eli Lilly and Co (6.1%), UnitedHealth Group Inc (6%) and AstraZeneca plc (5.9%) as of Apr 30, 2023.
VGHCX's 3-year and 5-year annualized returns are 7.2% and 8.8%, respectively. Its net expense ratio is 0.34% compared with the category average of 1.03%. VGHCX has a Zacks Mutual Fund Rank #1.
Fidelity Select Pharmaceuticals (FPHAX - Free Report) seeks capital appreciation by investing most of its assets in companies engaged in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs of all kinds.
Karim Suwwan de Felipe has been the lead manager of FPHAX since Jun 30, 2017. Most of the fund's holdings were in companies like Eli Lilly and Co (16.5%), AstraZeneca plc (10.1%) and Merck & Co., Inc. (9.5%) as of May 31, 2023.
FPHAX's 3-year and 5-year annualized returns are 7% and 10.3%, respectively. Its net expense ratio is 0.76% compared with the category average of 1.03%. FPHAX has a Zacks Mutual Fund Rank #1.
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3 Healthcare Mutual Funds to Counter Market Upheavals
The Federal Reserve increased the benchmark interest rate in the July meeting to its highest level in over two decades. The increase in interest rates directly impacts various stakeholders, including businesses, consumers and investors. Companies might find it harder to fund expansions and investments, while consumers could reduce spending due to higher borrowing costs.
In the vast landscape, a spotlight is on non-cyclical stocks, also known as defensive stocks, which tend to remain stable regardless of economic conditions. These stocks belong to sectors like healthcare.
The healthcare industry is inherently non-cyclical due to its critical role in providing life-saving products and services that are essential irrespective of economic fluctuations. Pharmaceuticals represent this trait within the healthcare sector.
Pharmaceutical companies play a crucial role in producing and distributing vital medicines that are essential for people's well-being. Even during economic downturns, the demand for essential medications remains constant as health is a primary concern for people regardless of their financial situation. This stability provides a shield against the negative effects of rising interest rates. Healthcare companies' ability to offer products and services that address fundamental human needs ensures their resilience in the face of economic challenges.
Thus, it’s imperative for astute investors to place bets on solid healthcare mutual funds for stable returns amid an economic downturn. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (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 provided comparatively strong performance along with lower fees.
Janus Henderson Global Life Sciences Fund (JNGLX - Free Report) invests its net assets in securities issued by firms that the portfolio managers believe put emphasis on life science in order to meet its investment goal. JNGLX has created a fundamental policy mandating a minimum investment of its total assets in securities issued by firms categorized under the "life sciences" sector as part of its strategy to locate such companies.
Andrew Acker has been the lead manager of JNGLX since Apr 30, 2007. Most of the fund's holdings were in companies like UnitedHealth Group Inc (6.1%), AstraZeneca plc (4.4%) and Akero Therapeutics, Inc. (3.4%) as of Mar 31, 2023.
JNGLX's 3-year and 5-year annualized returns are 8.4% and 10%, respectively. Its net expense ratio is 0.80% compared with the category average of 1.03%. JNGLX 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 Fund (VGHCX - Free Report) invests its assets 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 28, 2008. Most of the fund's holdings were in companies like Eli Lilly and Co (6.1%), UnitedHealth Group Inc (6%) and AstraZeneca plc (5.9%) as of Apr 30, 2023.
VGHCX's 3-year and 5-year annualized returns are 7.2% and 8.8%, respectively. Its net expense ratio is 0.34% compared with the category average of 1.03%. VGHCX has a Zacks Mutual Fund Rank #1.
Fidelity Select Pharmaceuticals (FPHAX - Free Report) seeks capital appreciation by investing most of its assets in companies engaged in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs of all kinds.
Karim Suwwan de Felipe has been the lead manager of FPHAX since Jun 30, 2017. Most of the fund's holdings were in companies like Eli Lilly and Co (16.5%), AstraZeneca plc (10.1%) and Merck & Co., Inc. (9.5%) as of May 31, 2023.
FPHAX's 3-year and 5-year annualized returns are 7% and 10.3%, respectively. Its net expense ratio is 0.76% compared with the category average of 1.03%. FPHAX has a Zacks Mutual Fund Rank #1.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>