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 the perfect choice for investors looking to enter this sector since they possess the advantages of wide diversification and analytical insight.

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Below, we share with you three top-ranked Healthcare mutual funds, namely Fidelity Select Pharmaceuticals Portfolio FPHAX, Vanguard Health Care Fund VGHCX and Fidelity Select Health Care FSPHX. 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.

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Fidelity Select Pharmaceuticals Portfolio invests the majority of its net assets in common stocks of companies engaged in the research, development, manufacture, sale, or distribution of pharmaceuticals and drugs. To arrive at their investment decision, FPHAX advisors employ fundamental analysis of factors such as each issuer’s financial condition and industry position, as well as market and economic conditions.

Fidelity Select Pharmaceuticals Portfolio has three-year annualized returns of 11.2%. As of August 2024, FPHAX held 63 issues, with 23.9% of its assets invested in Eli Lilly.

Vanguard Health Care Fund invests the majority of its net assets in the common stocks of foreign and domestic companies. These companies 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.

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Vanguard Health Care Fund has three-year annualized returns of 5.7%. VGHCX has an expense ratio of 0.38% compared to the category average of 1.04%.

Fidelity Select Health Care seeks to invest the majority of its net assets in common stocks of domestic and foreign issuers primarily engaged in the design, manufacture, or sale of products or services used for or in connection with health care or medicine. FSPHX’s investments are mostly based on a fundamental analysis of companies and their market position with respect to broader economic conditions.

Fidelity Select Health Care has three-year annualized returns of 3%. Edward Yoon has been the fund manager of FSPHX since October 2008.

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