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3 Healthcare Mutual Funds to Buy on the RFK Confirmation Hearing
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The healthcare sector has been lagging the S&P 500 over the last two years, with investors showing real interest in mega-cap tech and growth stocks based on the artificial intelligence (AI) boom. While a late-year rally in 2023 saw the sector staging a recovery, it did not stop healthcare from becoming one of the S&P 500’s worst-performing sectors in 2023 and 2024. The sector grew just 2.5% in 2024 compared with the benchmark index’s 23.3% jump.
The recent underperformance in the sector that characterized the last quarter after President Donald Trump nominated Robert F. Kennedy Jr. to lead the Department of Health and Human Services led to a slump of more than 10%. However, while RFK Jr. has long been a vaccine skeptic and some of his past comments have criticized groundbreaking drug developments, during the confirmation hearing, he distanced himself from the anti-vaccine movement and voiced support for HIV treatment and prevention drugs. This indicates that there maybe a far more balanced approach taken by the Health Department than is currently being feared by investors.
While the healthcare sector's weighting in the S&P 500 has declined to a 25-year low of about 10%, total U.S. healthcare spending has more than tripled in roughly the same period, from $1.4 trillion in 2000 to $4.9 trillion in 2023. The segment has witnessed major technological upheavals that should have a long-standing impact. Growth in key areas like telehealth, surgery, data analytics and biotechnology have aided in a big way.
An aging population dominated by Gen X and baby boomers and epidemics like obesity and diabetes have also helped the sector grow. Moreover, these stocks are considered defensive, meaning they tend to remain stable regardless of the prevalent market conditions. Regular demand for healthcare services is not dependent on the peaks and troughs of a market that has risen and fallen over the past two years over the Fed’s monetary policy.
The healthcare sector is poised for significant long-term changes, including the integration of AI in medical research. The sector also seems lucrative for investors looking for a steady cash flow because pharmaceutical companies are known to offer regular dividends. While it is not having a great time currently, with the measures in place and the new tech delivering them, the time may be ripe to indulge in the sector.
Hence, astute investors should bet on healthcare mutual funds at present. 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).
Our Picks
We have thus selected three such healthcare mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.
Janus Henderson Global Life Sciences (JNGLX - Free Report) primarily invests in equity securities issued by companies engaged in life sciences orientation.
Andrew Acker has been the lead manager of JNGLXsince April 2007. The fund has 8.4% of its portfolio invested in Eli Lilly, 6.8% in UnitedHealth Group and 4.6% in Novo Nordisk.
JNGLX’s 3-year and 5-year annualized returns are 2.7% and 7.8%, respectively. Its net expense ratio is 0.80%. JNGLXhas 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) primarily invests in the stocks of companies principally engaged in the development, production, or distribution of products and services related to the healthcare industry.
Rebecca Sykes has been the lead manager of VGHCX since May 2023. The fund has 8.2% of its portfolio invested in Eli Lilly, 7.5% in UnitedHealth Group and 5.6% in AstraZeneca.
VGHCX’s 3-year and 5-year annualized returns are 0.9% and 5.7%, respectively. Its net expense ratio is 0.38%. VGHCX has a Zacks Mutual Fund Rank #1.
Fidelity Select Pharmaceuticals Portfolio (FPHAX - Free Report) 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 June 2017. The fund has 23.9% of its portfolio invested in Eli Lilly, 13.3% in Novo Nordisk and 8.8% in AstraZeneca.
FPHAX’s 3-year and 5-year annualized returns are 6.5% and 8.4%, respectively. Its net expense ratio is 0.68%. FPHAX has a Zacks Mutual Fund Rank #1.
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3 Healthcare Mutual Funds to Buy on the RFK Confirmation Hearing
The healthcare sector has been lagging the S&P 500 over the last two years, with investors showing real interest in mega-cap tech and growth stocks based on the artificial intelligence (AI) boom. While a late-year rally in 2023 saw the sector staging a recovery, it did not stop healthcare from becoming one of the S&P 500’s worst-performing sectors in 2023 and 2024. The sector grew just 2.5% in 2024 compared with the benchmark index’s 23.3% jump.
The recent underperformance in the sector that characterized the last quarter after President Donald Trump nominated Robert F. Kennedy Jr. to lead the Department of Health and Human Services led to a slump of more than 10%. However, while RFK Jr. has long been a vaccine skeptic and some of his past comments have criticized groundbreaking drug developments, during the confirmation hearing, he distanced himself from the anti-vaccine movement and voiced support for HIV treatment and prevention drugs. This indicates that there maybe a far more balanced approach taken by the Health Department than is currently being feared by investors.
While the healthcare sector's weighting in the S&P 500 has declined to a 25-year low of about 10%, total U.S. healthcare spending has more than tripled in roughly the same period, from $1.4 trillion in 2000 to $4.9 trillion in 2023. The segment has witnessed major technological upheavals that should have a long-standing impact. Growth in key areas like telehealth, surgery, data analytics and biotechnology have aided in a big way.
An aging population dominated by Gen X and baby boomers and epidemics like obesity and diabetes have also helped the sector grow. Moreover, these stocks are considered defensive, meaning they tend to remain stable regardless of the prevalent market conditions. Regular demand for healthcare services is not dependent on the peaks and troughs of a market that has risen and fallen over the past two years over the Fed’s monetary policy.
The healthcare sector is poised for significant long-term changes, including the integration of AI in medical research. The sector also seems lucrative for investors looking for a steady cash flow because pharmaceutical companies are known to offer regular dividends. While it is not having a great time currently, with the measures in place and the new tech delivering them, the time may be ripe to indulge in the sector.
Hence, astute investors should bet on healthcare mutual funds at present. 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).
Our Picks
We have thus selected three such healthcare mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy), 2 (Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio.
Janus Henderson Global Life Sciences (JNGLX - Free Report) primarily invests in equity securities issued by companies engaged in life sciences orientation.
Andrew Acker has been the lead manager of JNGLXsince April 2007. The fund has 8.4% of its portfolio invested in Eli Lilly, 6.8% in UnitedHealth Group and 4.6% in Novo Nordisk.
JNGLX’s 3-year and 5-year annualized returns are 2.7% and 7.8%, respectively. Its net expense ratio is 0.80%. JNGLXhas 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) primarily invests in the stocks of companies principally engaged in the development, production, or distribution of products and services related to the healthcare industry.
Rebecca Sykes has been the lead manager of VGHCX since May 2023. The fund has 8.2% of its portfolio invested in Eli Lilly, 7.5% in UnitedHealth Group and 5.6% in AstraZeneca.
VGHCX’s 3-year and 5-year annualized returns are 0.9% and 5.7%, respectively. Its net expense ratio is 0.38%. VGHCX has a Zacks Mutual Fund Rank #1.
Fidelity Select Pharmaceuticals Portfolio (FPHAX - Free Report) 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 June 2017. The fund has 23.9% of its portfolio invested in Eli Lilly, 13.3% in Novo Nordisk and 8.8% in AstraZeneca.
FPHAX’s 3-year and 5-year annualized returns are 6.5% and 8.4%, respectively. Its net expense ratio is 0.68%. 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 >>