3 Healthcare Funds To Buy On Biotech Rebound

Moreover, mixed earnings results during the fourth quarter affected the sector to quite an extent. Also, continued decline in the first-quarter earnings forecast is likely to hurt the sector’s performance in the days ahead. First-quarter earnings from the healthcare sector are anticipated to grow only 0.6% from the year-ago level compared with 9.3% growth witnessed in the previous quarter. Moreover, the year-on-year revenue growth rate is projected to decline to 8.8%, lower than the fourth quarter’s growth pace of 9.7%.

However, an innovative product pipeline, product approvals and impressive performances by key products may act as growth catalysts and help the sector to overcome the above-mentioned concerns. Moreover, favorable valuation can make smaller companies within the sector attractive bets for acquisition. Separately, positive results from clinical trials also lift the sector’s stocks. They are difficult to predict, but come as welcome surprises for investors.

3 Healthcare Funds Picks

Given this strong recovery, we have highlighted three healthcare mutual funds that either have a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy). We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

These funds have encouraging one-month and three-year annualized returns. The minimum initial investment is within $5000. Also, these funds have a low expense ratio and no sales load.

Delaware Healthcare I (DLHIX - MF report) invests a large chunk of its assets in equity securities of companies that are engaged in operations such as production, development and of products and services related to healthcare sector. DLHIX is a non-diversified fund.

Along with a Zacks Mutual Fund Rank #1, DLHIX has one-month and three-year annualized returns of 5.9% and 16.8%, respectively. Annual expense ratio of 1.11% is lower than the category average of 1.35%.

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Disclosure: None.

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