Health Care Mutual Funds Top In May: Close Look At Two Winners
Best Mutual Funds 2015: May Performance Report
Highly profitable health care stocks are a hit with mutual fund investors. Innovative drugs, mergers and even ObamaCare are fueling the likes of Actavis (NYSE:ACT), Centene (NYSE:CNC) and Akorn (NASDAQ:AKRX).
That momentum grew in May. Health and biotech funds spiked 7.5% on average — topping all other domestic and foreign categories.
Ten health care mutual funds beat that average. Here’s a closer look at the two best performers:
Eventide Healthcare & Life Sciences Fund , with $ 271.7 million in assets, is a relatively new fund. It launched in December 2012.
ETAHX notched a 13%stock market gain in May. It’s also the top-performing health fund year to date. It gained 24% vs. the category average of 15%.
The fund holds 61 stocks, with roughly 30% of assets in the top 10. These include drugmakers Bluebird Bio (NASDAQ:BLUE), Tetraphase (NASDAQ:TTPH) and Agios (NASDAQ:AGIO). Its successful investing strategy has a smaller-cap growth skew.
It has a relatively high expense ratio of 1.68%, or $ 168 in fees for every $ 10,000 invested.
Fund managers say they use bottom-up fundamental research to pick winners, including clinical trial data.
Fidelity Select Biotechnology Portfolio holds $ 15.7 billion in assets and 219 stocks. Roughly 42% of assets are in the top 10 holdings.
FBIOX gained 11.7% in May. Year to date, it’s up 23%.
The fund’s top three holdings include, in order,Gilead (NASDAQ:GILD), Biogen (NASDAQ:BIIB) and Celgene (NASDAQ:CELG). All have an IBD Composite Rating of 98 or above. Like ETAXH, this too is an actively managed mutual fund.
Managers also use fundamental bottom-up research for successful investing. They evaluate product pipelines and breakthrough innovations. They also look for early-stage firms with promise.
FBIOX has a 0.74% expense ratio.