3 Top Healthcare Mutual Funds That Should Be on Your Radar

One of the best ways to safeguard investments is by parking money in the healthcare sector. This is because demand for healthcare services does not change with market conditions. Many pharmaceutical companies also pay out regular dividends.

Companies that consistently offer dividends are financially stable and generate a steady cash flow, irrespective of market conditions. Mutual funds are the perfect choice 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, namely Fidelity Select Health Care Services Portfolio FSHCX, Fidelity Select Portfolio Medical Technology And Devices Portfolio FSMEX and Vanguard Specialized Portfolios Health Care Fund VGHCX. 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 Health Care Services Portfolio fund invests most of its net assets in common stocks of foreign and domestic companies that are engaged in the ownership or management of hospitals, nursing homes, health maintenance organizations, and companies specializing in the delivery of healthcare services. FSHCX invests in stocks based on fundamental analysis factors like the issuer's financial condition, industry position, as well as market and economic conditions.

Fidelity Select Health Care Services Portfolio fund has five-year annualized returns of 5.1%. As of February 2025, FSHCX held issues, with 23% of its assets invested in UnitedHealth Group.

Fidelity Select Medical Technology and Devices Portfolio fund invests most of its net assets in common stocks of foreign and domestic companies that are principally engaged in the research, development, manufacture, distribution, supply, or sale of medical equipment, devices, and related technologies, companies enabling drug discovery. FSMEX advisors also invest in companies providing information technology services primarily to healthcare providers.

Fidelity Select Medical Technology and Devices Portfolio fund has five-year annualized returns of 5%. FSMEX has an expense ratio of 0.63%.

Vanguard Specialized Portfolios Health Care Fund invests the majority of its net assets in common stocks of foreign and domestic companies that are engaged in the development, production, or distribution of products and services related to pharmaceutical and medical supply companies, as well as businesses that operate hospitals and other healthcare facilities. VGHCX advisors may also invest in companies that are engaged in medical, diagnostic, biochemical, and other research and development activities.

Vanguard Specialized Portfolios Health Care Fund has five-year annualized returns of 4.4%. Rebecca Sykes has been one of the fund managers of VGHCX since May 2023.

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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This article originally published on Zacks Investment Research (zacks.com).

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