If you're looking for the best healthcare funds, you'll likely find them in a handful of low-cost*** same funds and ETFs. Investing in sector funds can be a smart way to boost long-term returns if you do it the right way. It can also help you minimize risk through diversification. Narrowing down a small list of all the***same funds and ETFs that invest in healthy stocks can be challenging. But choosing the best healthcare funds is fairly easy if you know the best qualities to look for.
The healthcare sector is also known as wellness or specialty health. This is an equity sector that focuses on the healthcare industry, which is very broad and diverse. Some specific areas (or subsectors) within the health industry include hospital groups; institutional services; insurance companies; drug manufacturers; biotech companies; and medical device manufacturers.
Investors choose health sector funds for two main reasons: growth and diversification. Like technology, health is one of the fastest-growing sectors. With the aging of the U.S. population and advances in medical technology, health care is likely to be a leading growth area in the coming years or decades. Baby boomers, born between 1946 and 1964, make up the largest segment of the U.S. population. Baby boomers in their 50s, 60s and 70s are now the largest consumers of health products and services.
As for diversification, health stocks are considered defensive. That's because they tend to do well (or fall less) in bear markets. That's true even during recessions, when consumer spending is down. People still need basic health products and services, such as medications, doctor visits and emergency care.
Fidelity invests in a variety of stocks within the broad health care industry. They include subsectors such as pharmaceuticals, biotechnology, medical devices and equipment. So if you want to add health stocks to your portfolio and have broad, long-term support for growth in the health sector, FSPHX is a smart choice.?